U.S. businesses, helped by some of Trump's policies, have started to increase investments and capital expenditure. But much of those funds have flowed to Asia because China is still the factory of the world, according to the bank's chief economist, James Sweeney.
"Increasingly in the U.S., when there's acceleration in business expansion, there's a sharp plunge in trade balance," Sweeney said during a panel discussion at the Credit Suisse Asian Investment Conference in Hong Kong.
"The tax reform drives the deficits larger because the capital goods that the firms are increasingly buying are here in Asia," he added.
The economist said China accounts for around 30 percent of global manufacturing capacity — a situation that would persist for years to come, which means trade tensions between the world's two largest economies are not going away.
Trump has frequently singled out China for what he says are unfair practices in the global trade arena. He also blamed the Asian giant for the massive trade deficit, which he said harmed American businesses and workers. The U.S.-China trade gap hit an all-time high of $275.81 billion last year.
In return, the president has asked China to come up with a plan to cut the two countries' trade imbalance. He also introduced what many deemed protectionist policies, such as the recent steel and aluminium tariffs, to boost the American economy.
The worsening U.S. trade and current account deficits are one reason why Credit Suisse holds a bearish view on the greenback, noted Sweeney. That's despite a stronger economy in the U.S. that would likely prompt the Federal Reserve to hike four times in 2018, he added.
"Good global growth will change the view on rates in Europe and the rest of the world at a time when current account and trade balances are deteriorating in the U.S.," he said. "Debt in the U.S. is pretty elevated. We're bearish on dollar against the euro, against the yen and against a number of emerging markets's currencies."