On CNBC's "Squawk Box," the chief economic advisor at Allianz predicted a 15 percent chance that Trump's approach would result in a "Reagan moment" in trade, especially with China. It would be similar to Ronald Reagan's tough stance against the Soviet Union during the Cold War.
"That would transform the landscape," El-Erian said. Reagan also engaged in aggressive trade policies, including quotas on Japaneses cars. Some analysts say the policies were mixed.
El-Erian gave a 25 percent chance that Trump's trade moves would spark a global trade war.
El-Erian, considered one of the world's most influential financial market thinkers, previously said he expects the U.S. will win the trade war, citing the performance of U.S. markets relative to China and others.
But he said Monday the real question for investors is "how much damage would we incur in the process of winning this?"
"I've said from day one, it's just a matter of time until other countries realize that their best approach is to collaborate with the U.S. and fix things that are broken," El-Erian said.