The stock market, which took a hit Monday, is not reacting to the "unbelievable" strength of President Donald Trump's economic agenda, senior White House economic official Peter Navarro told CNBC.
Equities tanked Monday as fears of a possible trade war and regulation of the tech industry weighed on investors.
In an interview with "Closing Bell," Navarro said Trump's "singular focus is on economic growth, rising wages and a strong manufacturing and defense industrial base."
"If we hit all points … the market will go up."
The Dow Jones industrial average plunged 459 points on Monday, after falling as much as 758.59 earlier in the day. The dropped 2.2 percent and re-entered correction territory. The Nasdaq composite dropped 2.7 percent.
A White House official who declined to be named told CNBC on Monday: "We're focused on long-term fundamentals. We're not really reacting to market fluctuations."
Navarro, director of the White House National Trade Council, however suggested investors may be overreacting.
"Everybody needs to relax and kind of look the chess board here. This economy is just strong," he said.
If fact, he said if he if put on his old hat as a financial market analyst, "I'm thinking the smart money is certainly going to buy on the dips here because the economy is as strong as an ox."
China stoked fears of a trade war Monday when it announced it is implementing new tariffs on 128 products from the United States. The move is in response to Trump's duties on imported steel and aluminum.
Navarro said China was "basically throwing another punch" at the U.S.
"They steal our stuff," he said, referring to the alleged theft of American intellectual property.
"Are we supposed to not defend ourselves and then when we defend ourselves are we supposed to take another punch from them?" he added. "The Chinese side needs to think very carefully about how they respond because the American people are not going to stand for that kind of response."
When asked whether there would be a U.S. action to China's new tariffs, Navarro said he didn't think this would be an "action, response, action, response" situation.
"That's not what this should be about. That just leads to escalation and spirals," he said.
However, Trump is "firmly committed to a course of action which will level the playing field between the United States and China," he added.
CNBC's Eamon Javers contributed to this report.
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