UN Yemen mediator Martin Griffiths, UN aid chief Mark Lowcock and UN food chief David Beasley issued their warnings during a UN Security Council meeting on Yemen.
"We fear that there will be inevitably a chilling effect on my efforts to bring the parties together," Griffiths told the 15-member body. "The decision will contribute to the prospect of famine in Yemen and should be revoked based on humanitarian grounds at the earliest opportunity."
The United Nations describes Yemen as the world's largest humanitarian crisis, with 80% of the people in need of aid.
U.S. Secretary of State Mike Pompeo announced the move against the Iran-aligned Houthis on Sunday. It will come into effect on Jan. 19, the last full day in office of President Donald Trump's administration.
President-elect Joe Biden takes office on Jan. 20. The designation could be revoked by Biden's administration.
"We are struggling now without the designation. With the designation, it's going to be catastrophic. It literally is going to be a death sentence to hundreds of thousands, if not millions of innocent people in Yemen," said Beasley, a former governor of South Carolina.
"This designation - it needs to be reassessed; it needs to be re-evaluated. And quite frankly, it needs to be reversed," he said.
A Biden transition official said: "We’ve taken note of these last-minute maneuvers, one of which is operative on Jan. 19. The transition team is reviewing each one, and the incoming administration will render a verdict based exclusively on one criterion: the national interest."
'RIGHT STEP'
While the United Nations and aid groups help about a third of Yemen's 28 million people, Lowcock stressed commercial imports are key to ensuring millions more have access to food.
He said a U.S. plan to issue licenses and exemptions to allow aid agencies to continue working will not prevent a famine in Yemen, which relies almost solely on imports.
"Aid agencies cannot – they simply cannot - replace the commercial import system," said Lowcock, warning the U.S. decision would push Yemen into a "famine on a scale that we have not seen for nearly 40 years."
"What would prevent it? A reversal of the (U.S.) decision," he said.
Deputy U.S. Ambassador to the United Nations Richard Mills told the Security Council and the UN officials that Washington was listening and the concerns raised "are informing how we approach the designation implementation."
"But we do believe that this step is the right move forward to send the right signal if we want the political process to move forward," Mills said.
Several council members raised concerns. Russia's UN Ambassador Vassily Nebenzia urged the United States to review its decision.
"This risks not only seriously exacerbating the humanitarian situation in the country, but also undermining UN efforts whose aim is to launch negotiations between the warring sides," Nebenzia told the council.
The designation freezes any U.S.-related assets of the Houthis, bans Americans from doing business with them and makes it a crime to provide support or resources to the movement.
Beasley also raised the alarm on a massive shortfall in aid funding for Yemen. He called on "the Gulf states, the Saudis to pick up the financial tab for the needs inside Yemen because the needs in other parts of the world are so great."