Experts also said it would dramatically complicate efforts to negotiate the release of two American citizens detained by North Korea.
"The cutting off of diplomatic communications under such circumstances is how states can fall into conflict," said Victor Cha, director of Asian studies at Georgetown University. "This decision is especially bad for the detained Americans as the negotiations for these cases often used the New York channel."
With the North Korean office closed, all of Pyongyang's dealings with Washington - including the negotiations over two detained American citizens - will be conducted under "wartime law," according to the official Korean Central News Agency. "The US is wholly to blame for the ensuing unpleasant things happening in the bilateral ties," said the regime's Foreign Ministry.
It remains unclear how that might affect the cases of Kim Dong Chul, a South Korean-born American who's serving a 10 year hard labour sentence after being convicted of spying in April, and Otto Warmbier, an American serving 15 years of hard labour for attempting to steal a banner from his hotel in the Korean capital.
In the past, the North has suggested that wartime laws would preclude detainees from being released on humanitarian grounds. The rationale for the severing of ties cited by Pyongyang was the US decision to impair the "dignity of the supreme leadership of the DPRK by releasing what they call 'report on human rights' and 'list of targets of special sanctions.'"
Last week, the US slapped economic sanctions on about 10 North Korean officials and - for the first time - leader Kim Jong Un, for what US officials called "notorious abuses of human rights".
The sanctions targeted a range of assets, including property under US jurisdiction. The other senior officials targeted were Choe Pu II, head of the Ministry of People's Security; Ri Song Choi, a counsellor in the Ministry of People's Security; and Kang Song Nam, bureau director at the Ministry of State Security.
The US also angered Pyongyang when Washington and Seoul announced an accord to deploy a missile defence system known as the Terminal High-Altitude Area Defence, or Thaad, on the peninsula.
The two allies said the system would serve to protect South Korea and US forces operating in the region from Pyongyang's increasingly sophisticated nuclear and ballistic missile systems. There are about 28,500 US troops based in South Korea. The location of the Thaad base is expected to be revealed sometime this year.
North Korea has said the stated reason for deploying the system was "absurd," and claimed that its arsenal, including an intermediate-range ballistic missile programme, was for "self-defence."
Tensions between the two countries have plunged after the North carried out a spate of missile tests this year following an atomic-bomb test in January - moves that prompted increased US and UN sanctions on the Hermit Kingdom.
We are entering such a period without the New York channel open to keep things from boiling over
Experts are divided about the long term risks of cutting off communications in New York. Scott Snyder, a Korea expert at the Council on Foreign Relations said the channel has been operating as "more of a drop box for delivery of messages between the two governments."
"Its absence will not have a major impact on relations between the two governments but signifies their deterioration," he said.
But Cha noted a particular risk of having no direct channel open ahead of the annual US -South Korea exercises in August, which focus on defending South Korea from a North Korean attack and typically prompt provocations from both sides.
China could theoretically serve as an intermediary, but Cha said Beijing might only intervene once a crisis "that might otherwise have been avoided" was already underway.
"We are in a situation where one side is ratcheting up provocations while the other is sanctioning at unprecedented levels," he said. "We are entering such a period without the New York channel open to keep things from boiling over."
- Foreign Policy