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Future of US-China relations more challenging than Trump expects, Bremmer says

Establishing a new U.S.-China relationship may be more difficult than President-elect Donald Trump expects, a prominent China watcher said Thursday.

"The environment for the entire Trump administration on China is going to be much more challenging to negotiate and I don't think Trump has gotten his head around that yet," Ian Bremmer, president of consulting firm Eurasia Group, said on CNBC's "Squawk Alley."

Trump announced Wednesday that outspoken China critic and economist Peter Navarro will head a newly formed National Trade Council. Navarro has run for office as a Democrat.

Bremmer said Navarro is a "smart and credible guy," a "real academic" and "not a crazy."

Both Navarro and Trump agree on tough tactics such as labeling China a currency manipulator and opposing the Trans-Pacific Partnership.

"The problem is that [partnership] was the one thing that was a mechanism to get all of America's allies on board with U.S.-led trade as opposed to China-led trade," Bremmer said.

"If you're going to tell America's allies that you're not going to give them this commitment, you're not going to follow through on what's most important for them for avoiding a China-led system and then you're beating up on China, you're going to end up with a lot of countries doing what the Philippines did under Obama, say the future is actually China, not the United States, I can't trust these guys," Bremmer said.

He also pointed out that U.S. allies recognize that Trump will be up for re-election in a few years, while China will remain the same challenge in Asia for many years to come.

"I'm less worried about a trade war. I'm worried more about ... backing into inadvertent escalation like you saw on Taiwan," Bremmer said. He added that the Chinese will likely retaliate tit for tat if the U.S. takes action against China, which might give Trump pause once he realizes the gravity of the situation.

"I'm more worried about a potential conflict over Taiwan, over North Korea, where the stakes are a lot higher and, frankly, where Trump doesn't have capable people yet who are advising him," Bremmer said.

The Trump transition team did not immediately respond to a request for comment.

Also expected to play a major role in shaping U.S. trade policy is Trump's pick for Commerce secretary, billionaire Wilbur Ross.

"Wilbur Ross is obviously an extremely capable fellow. I think he's one of the best appointments they've made so far," Bremmer said.