The 2020 race is "going to be very tough," said the former chief White House strategist. "Trump knows that. That's why he's very focused in his efforts."
A key focus in the presidential election will be China, the Goldman Sachs alum and longtime critic of China said. Candidates who pressure Beijing and show they can navigate a trade deal will do better, he added.
"Look, you can have a Reagan-type victory if things go your way, but I think it's sticking to what the program is, sticking to his policies," Bannon said on "Squawk Box." "That's why China is going to frame this [election]."
When it comes to the ongoing U.S.-China trade war, Bannon said Trump has held steady in his demands. "Trump has been, I think, the 'Rock of Gibraltar' on this."
Most recently, Trump delayed increasing tariff rates on $250 billion worth of Chinese goods from Oct. 1 to Oct. 15. Both sides have imposed billions of dollars import tariffs on each other's goods over the past year.
However, Bannon admitted that former Vice President Joe Biden is a strong 2020 contender. Biden in the past has knocked Trump's trade policy, but he's advocated for the U.S. to curb China's "abusive" economic power.
"Trump may think he's being tough on China," Biden said in a July speech. However, the Democratic presidential hopeful added that all the president has "delivered as a consequence of that is American farmers, manufacturers and consumers losing and paying more."
Though for 2020, Bannon said it helps the president that Wall Street is coming around to his view on how China has been unfairly protecting its economy to the detriment of the rest of the world.
"Wall Street is starting to get religion like Trump," Bannon said.
U.S. and Chinese deputy trade negotiators are set to meet in Washington on Thursday to resume trade talks for the first time in nearly two months, ahead of planned tariff increases. The negotiations, which are scheduled to go into Friday, are aimed at laying the groundwork for higher-level talks set for October.