The face-to-face meeting was welcome news for financial markets, with stocks jumping as skittish investors took comfort in a development aimed at resolving the ongoing trade war between the two economic superpowers.
When asked Wednesday whether he was optimistic something could be signed at the G-20 meeting, Schwarzman replied: "I think that's extremely improbable because there has been almost nothing happening since May when the discussions ended."
The chairman and CEO of private equity giant Blackstone, which has over $500 billion in assets under management, told CNBC's "Squawk Box Europe" that Trump and Xi must first decide "how far they are willing to go conceptually" before letting senior trade officials work out some of the finer details.
"I think the expectation of signing something is not on the table," he added, but suggested that the G-20 discussions could lead to something in the future. "This (meeting) would be a restart, you know, with a senior framework, and then you'd see what happens."
The U.S. and China have imposed tariffs on billions of dollars' worth of one another's goods since the start of 2018, battering financial markets and souring business and consumer sentiment.
In May, Trump hiked tariffs on $200 billion in Chinese imports, and threatened to slap duties on another $300 billion after talks broke down that month.
Trump told CNBC last week that he would immediately impose the additional $300 billion in tariffs if Xi didn't attend the Group of Twenty (G-20) summit.
Current and former Trump administration officials and trade advisors have cautioned that a potential meeting with Xi is not likely to yield a trade agreement on its own, but could help clear the path to a deal.
"We have just hit a roadblock and you can see the tensions going up. I don't think that works for anyone particularly in the business community in the short term," Schwarzman said.
"All that's happening with this tension is its hurting both countries and the debate of who are you hurting more is interesting but fundamentally people would like to go back to a normal relationship," he added.
Trump met with Xi at the prior G-20 in Buenos Aires, Argentina, last December. The two leaders discussed the trade dispute and tariffs, as well as the U.S. opioid crisis.
While that summit was in full swing, Huawei CFO Meng Wanzhou was arrested in Canada and charged in Vancouver over allegations that the company defrauded banks by concealing payments from sanctioned Iran.
— CNBC's Kevin Breuninger contributed to this article.