Participating in the last Democratic presidential debate in Miami, Florida, front-runner Clinton avoided giving a direct answer to the question, while Sanders responded by saying that the American people will never elect a president who insults Mexicans, Muslims, women and blacks.
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"Senator Sanders, do you think it's fair to call Donald Trump a racist?" the moderator asked.
"This is what I think. I think that the American people are never going to elect a president who insults Mexicans, who insults Muslims, who insults women, who insults African-Americans," Sanders said.
"And let us not forget that several years ago, Trump was in the middle of the so-called birther movement, trying to delegitimise the president of the United States of America," he said.
Clinton on the other hand she would engage Trump without resulting to the kind of language that the Republican front-runner often employs.
"If I'm so fortunate enough to be the Democratic nominee, there will be a lot of time to talk about him. I was the first one to call him out. I called him out when he was calling Mexicans rapists," she said.
"When he was engaging in rhetoric that I found deeply offensive...I am pleased that others are also joining in making clear that his rhetoric, his demagoguery, his trafficking in prejudice and paranoia has no place in our political system," she said.
"You don't make America great by getting rid of everything that made America great," Clinton said.
Not satisfied with the answer, the moderator repeated the question and Clinton responded by saying, "I think it's un-American. I think what he has promoted is not at all in keeping with American values. And I am going to take every opportunity to criticise him, to raise those issues," Clinton said.
"I'm not going to engage in the kind of language that he uses. I think we can make the case against him if he is the nominee, by pointing out what he has said. What he claims to believe in The values he's promoting and I think that's a better way for the American people to draw their conclusions," Clinton said.
Clinton also said that the proposal of building a massive wall across US-Mexico border and having Mexico Government pay for it is a "fantasy" of Trump.
"You know, it's just fantasy," Clinton said in response to a question as she took a dig at Trump's idea of building a wall along the US-Mexico border to prevent illegal immigrants from entering the US.
Trump says that the Mexico Government would pay for building this wall, which according to him is estimated to cost $10 billion.
"As I understand him, he's talking about a very tall wall," she said amidst laughter from the audience.
"Right? A beautiful tall wall. The most beautiful tall wall, better than the Great Wall of China, that would run the entire border. That he would somehow magically get the Mexican government to pay for," she said.
"And, you know, it's just fantasy. And in fact, if he cared to know anything about what members of Congress, like the senator (Sanders) and I have done, where it was necessary, we did support some fencing," Clinton said.
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