The tariff battle between the United States and China has not yet entered a stage where it's a trade war, and it's likely "sanity" will ultimately prevail, according to the chairman of Swiss investment bank UBS.

Washington and Beijing are not likely to undo a lot of the positive benefits that each country experienced due to globalization, Axel Weber told CNBC on Saturday at the annual Singapore Summit. Still Weber said that the trade dispute is affecting relationship between the two countries beyond the trade of goods and is having an impact on services.

"As the U.S. is increasingly questioning the openness of trade, the Chinese are increasingly sort of asking questions about services and U.S. firms, in particular financial firms, doing business in China," he said. "So, there's a whole lot of co-mingling of interest at the moment."

"That is something that we raised multiple times in discussion with the U.S. authorities," Weber told CNBC. "That you have to be careful because if you take a holistic picture on goods and service trade, the imbalance is not as pronounced as it appears to be when you just look at goods. And, increasingly, countries look at that holistically."

The world's two largest economies have already imposed tariffs on $50 billion worth of each other's goods. That could escalate: The U.S. is considering additional tariffs on $200 billion in Chinese goods and President Donald Trump said he was ready to hit China with another $267 billion in tariffs. Beijing has warned that it would retaliate.

"It's not at a stage where it's a trade war. I think there is a good chance that sanity will prevail ultimately," Weber said, but he acknowledged that there is still an increasing risk.

One potential area of concern for market watchers is that Beijing could retaliate against the tariff threats from the Trump administration by allowing its currency to continually depreciate against the dollar. The yuan has been a sore point for a number of U.S. administrations, which have blasted Beijing for allowing the currency to weaken to help exports.