Trade war would disrupt markets in China, US, expert says

Both US and China to be disrupted with a trade war: Hormats

Both U.S. and Chinese markets could be disrupted if President-elect Donald Trump starts a trade war with China, Bob Hormats, vice chairman of Kissinger Associates, told CNBC on Thursday.

Hormats, former vice chairman of Goldman Sachs (International), said Trump could dangle threats in front of China or implement a tariff on imports, but, in any case, there are likely to be consequences.

"Importers, particularly Wal-Mart's, and others buy a lot of Chinese goods because Americans buy them and they get them cheaper on the shelves of these stores. What happens to the price of those items? What happens to the large companies that are selling in China whose profits depend heavily on it?," Hormats said on "Squawk on the Street."

Renegotiating global trade deals was a major selling point of Trump's campaign platform. The president-elect has boasted that he was able convince air-conditioner manufacturer Carrier to scale back announced job cuts as part of a shift to manufacturing to Mexico.

While it is too early to predict the degree to which a trade war would impact trade and investments, Hormats urged caution.

"Think through carefully what you plan to do," he said. "Don't do it by tweets, but have your negotiators and the Chinese sit down and try to work these things out before you take action. The Chinese are not particularly keen on being threatened, and probably are going to be very reluctant to act over threat or a particular series of actions."

If the president-elect wants to protect American jobs, Hormats said the Trump administration could also focus on the role technology plays in the market.

"Most of the job displacement is not from imports, it's from technology displacing old jobs. The numbers are quite overwhelming in that respect."