This is going to be the ‘biggest conundrum’ in 2017 for the US economy

If the U.S. dollar continues its gains post-Trump victory, the world's two largest economies are likely to be on a collision course, Bank of America Merrill Lynch's David Woo told CNBC on Thursday.

President-elect Donald Trump has claimed via Twitter recently that China has unfairly devalued its currency, so it can get an upper hand with its exports — though it's the opposite of what China is doing. As the dollar strengthens against several currencies, there will be pressure on Trump to label China as a currency manipulator, Woo said..

"It's almost like baking a cake," Woo, head of global interest rates and currencies research at BofA, said on "Squawk Box." "The more successful Trump is going to be, the stronger ... the dollar which means [the] weaker ... the RMB, which increases the pressure on Trump to label China as a currency manipulator."

He continued: "Steve Mnuchin started talking about, you know, he didn't endorse a strong dollar policy. He said strong economy is in the best interest of the United States ... He needs a weak dollar. As a result, the two countries will be on collision course because it's impossible to have a weak dollar."

Mnuchin, Trump's pick for Treasury secretary, has said he is confident the economy will expand during a Trump presidency. China could face more pressure in the coming months as the U.S. Federal Reserve may raise interest rates and the dollar strengthens.