"An impeachment proceeding would blow the market away," Welch said on "Squawk Box."
Welch also said Trump's firing of James Comey as FBI director was a "rookie mistake." He added, "You don't make any friends doing it the way [Trump] did it."
"I think without question we have a guy that's on the right agenda with crappy management practices," Welch said, giving the president a "D minus" on his management skills.
Trump needs to unite all the different factions in the White House, get to the bottom of the media leaks, and get back to his message of "Make America Great Again," he added.
While no fan Barack Obama's policies, Welch said the former president ran a tight ship. "They spoke with one voice."
The botched Comey firing is an example of Trump's inexperience in running a bureaucracy, the executive chairman of Jack Welch Management Institute said.