(Reuters) U.S. President Donald Trump said on Thursday a major conflict with North Korea is possible in the standoff over its nuclear and missile programs, but he would prefer a diplomatic outcome to the dispute.

"There is a chance that we could end up having a major, major conflict with North Korea. Absolutely," Trump told Reuters in an Oval Office interview ahead of his 100th day in office on Saturday.

Nonetheless, Trump said he wanted to peacefully resolve a crisis that has bedeviled multiple U.S. presidents, a path that he and his administration are emphasizing by preparing a variety of new economic sanctions while not taking the military option off the table.

"We'd love to solve things diplomatically but it's very difficult," he said.

In other highlights of the 42-minute interview, Trump was cool to speaking again with Taiwan's president after an earlier telephone call with her angered China.

He also said he wants South Korea to pay the cost of the U.S. THAAD anti-missile defense system, which he estimated at $1 billion, and intends to renegotiate or terminate a U.S. free trade pact with South Korea because of a deep trade deficit with Seoul.

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