The stock market could increase another 10 percent this year if the U.S. were to settle its trade war with China and reach a new North American Free Trade Agreement, Jeremy Siegel told CNBC on Thursday.

The was already 7 percent higher for the year as of Wednesday's close.

"The next few months are going to be a challenge," said Siegel, the Wharton School finance professor who for years correctly called the march higher on Wall Street. He recently became a bit more cautious.

"But if we can get China [and] NAFTA settled, I see a 10 percent pop in the market because I think that's the kind of 800-pound gorilla keeping a lid on prices now," Siegel said on "Squawk Box."

Earlier this month, Siegel warned that implementation of the $200 billion worth of additional tariffs that President Donald Trump has threatened could result in a "20 percent drop" in stocks.

On Tuesday, the S&P 500 during the trading session hit an all-time high for the first time in seven months but failed to close at a record. A day later, the stock bull market became the longest ever on record since World War II. It started March 9, 2009.