US President Donald Trump on Friday signed a defense policy bill containing provisions restricting the drawdown of American troops in South Korea.

The National Defense Authorization Act for Fiscal Year 2020, which authorizes funding for the Department of Defense, passed the Senate on Tuesday and was sent to Trump to be enacted into law.

The US president signed the bill during a ceremony held at Joint Base Andrews, Maryland, before departing for Florida for the Christmas holidays.

The new legislation prohibits the use of funds to reduce the number of American troops stationed in South Korea below the current level of 28,500 unless the US defense secretary certifies that it is in the US national security interest.

The defense secretary must also declare that the reduction will not significantly undermine the security of US allies in the region, and that allies including South Korea and Japan have been appropriately consulted.

The new bar represents an increase of 6,500 from the 22,000 level stipulated in this year's NDAA and limits the Trump administration's ability to use a troop drawdown as a bargaining chip in current negotiations with South Korea on a defense cost-sharing deal.

South Korean media have raised the possibility the US will remove troops if Seoul rejects Washington's demands for a significant hike in its contributions to shared defense costs next year.

The new NDAA also calls for secondary sanctions on foreign banks and companies that facilitate illicit financial transactions for the North.

The measure would especially affect Chinese banks at a time when China and Russia have proposed the lifting of some United Nations sanctions on the North.

The provision is billed the Otto Warmbier North Korea Nuclear Sanctions Act of 2019, after the American college student who died in 2017 following more than a year of detention in the North. (Yonhap)