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Evercore's Ed Hyman says Trump knows he can't treat China like Mexico

President Donald Trump may be a China hawk, but he knows he must tread more carefully with the rival superpower than he needs to with Mexico, Evercore ISI Chairman Ed Hyman said Friday.

"I think he's tough, but I think he knows that China is not a pinata. He can beat up Mexico," Hyman told CNBC's "Squawk on the Street."

Though the stock market has priced in Trump acting on some of his protectionist rhetoric, so far the president has been relatively tactful in his mission to achieve fairer trade with China, Hyman said.

Trump has vowed to pursue fair trade on all fronts including with China while avoiding trade war, which also means rewriting the North American Free Trade Agreement, or NAFTA. Hyman said achieving those goals "is pretty realistic."

While Trump risks cooling relations with China's leadership by pushing his "America First" idea too aggressively, the administration has avoided that for the time being, Hyman said.

"It looks to me as though they're doing a pretty good job of advancing, but doing it in a fairly diplomatic way, as the letter to President Xi [Jinping] showed and the phone call today," he said.

And despite calls by economist Peter Navarro, Trump's tap to lead the National Trade Council, and others to get even tougher on trade with China, Hyman believes Trump will make a pragmatic decision.

"My view is he'll take those [calls] into account, but in the end, he's a practical business guy," Hyman said.