"People say he's a nut case. He's not. He's very calculating. He's very smart. He's playing all this very, very well. He's not going to push the button because then he's gone," the Montana Democrat said on "Squawk Box."
"There's not going to be a war. There can't be a war," he added.
Baucus was U.S. ambassador to China under President Barack Obama from 2014 to 2017.
The former senator spoke as tensions between the United States and North Korea have escalated after the latter test fired an intercontinental ballistic missile on July 4. ICBMs have a minimum range of around 5,500 kilometers, or about 3,400 miles, and are capable of carrying nuclear weapons.
The U.S. and China said Tuesday they are making progress on a new U.N. resolution that would impose additional sanctions against North Korea after the missile test.
On Tuesday, North Korea also vowed to "strike a merciless blow at the heart of the U.S.," amid a report the regime was prepping for a new missile test. South Korea is reportedly looking to increase its ballistic missile firepower to a 1-ton conventional warhead.