When it comes to trade, President Donald Trump should make his priority dealing with China, Rep. Jeb Hensarling, R-Texas, told CNBC on Wednesday.

The text of a trade deal between the U.S. and Mexico is expected to be released as early as Friday, two sources have told CNBC. That text will allow Canada to join the agreement at a later date, one source said.

While Hensarling is "heartened" by the handshake deal, he said he believes it is important that Canada be a part of it.

"I must admit, also, having returned from China within the last few weeks, that's where our problem is. They're the serial violator of the WTO. They're still taking our technology, our intellectual property by hook and crook," the chairman of the House Financial Services Committee said on "Power Lunch."

"And I've encouraged the administration, 'Let us focus our resources first in dealing with China. That's the most important thing to do,'" he added.

Trump's latest round of tariffs on $200 billion of Chinese imported goods went into effect Monday. Beijing retaliated by slapping duties on about $60 billion worth of U.S. imports.

Earlier this week, China published a 71-page paper accusing the Trump administration of "trade bullyism practices" that have become "the greatest source of uncertainty and risk for the recovery of the global economy."

Peter Navarro, director of the National Trade Council at the White House, told CNBC on Monday that establishing a new trade deal with China could be much tougher than it was with Mexico.

And it appears that any talks between the two nations is not in the cards, at the moment. Late last week, The Wall Street Journal reported that China had rescinded its proposal to send delegations to Washington for trade talks amid the escalating tit-for-tat tariffs. Other news outlets matched the Journal's reporting throughout the weekend.

On Wednesday, Hensarling stood by his contention that tariffs are a tax and voiced his concerns about a possible escalation into a global trade war.

"The president is responsible for the great economy but if we end up a full-fledged trade war with the world, all of that could be compromised, all of that could be lost," he warned.

— CNBC's Kate Rooney, Ylan Mui, Tucker Higgins and Yen Nee Lee contributed to this report.