President Donald Trump's hawkish stance on the U.S. trade deficit is misinformed and could wreak havoc on a still-fragile global economy, Asia business expert Stephen Roach told CNBC on Wednesday.

Roach suggested that rather than viewing the trade deficit as cause for concern, the Trump administration should turn its attention to the United States' dwindling savings, which he pointed to as the root cause of trade imbalances.

"We can't keep harboring the fantasy that we can grow indefinitely without saving for the future. The trade deficits are a manifestation of our saving deficit," Roach said on "Squawk Box." "And, you know, one of these days, that formula for false prosperity is going to be mark to market."

The former Morgan Stanley Asia chairman and current Yale School of Management senior fellow blasted the United States' reliance on the likes of Germany, Japan and China as sources of borrowed savings.

In response to Trump picking conservative economist Kevin Hassett to lead his Council of Economic Advisers, Roach wished him the best, but took on a grave tone:

"I hope he continues in the great tradition of providing rigorous, sound, analytical advice for the White House before they make a very serious mistake of historic consequences," he said.

Roach said that slapping tariffs on China would not solve the United States' trade discrepancies, arguing that it could instead aggravate Chinese policymakers and spur global trade conflict.

"There's a lot of things that China does that we don't like that we need to be tough in negotiating with," Roach said. "But if we hit them with tariffs, they'll reciprocate and put tariffs on us, and we could get into a global trade war."

And the effects of a trade war with China would be felt both at home and abroad, as global supply chains would be disrupted and the cost of goods would rise, Roach said.

"It would ... raise the price of goods sold at Walmart, which, by the way, would be a huge tax on struggling American families who are having a hard time making ends meet," he said.

Echoing the argument he presented in a Financial Times op-ed, Roach said that to address the United States' trade deficits, trade officials must also address the savings deficit.

That would avoid trade deficits simply being redistributed to other parts of the world, which in turn could simply kill U.S. trading partnerships without fixing their inherent problems, he said.

"Pick everybody's favorite whipping boy, China, and it's like a water balloon. The water just goes somewhere else and the deficits get distributed to our other trading partners, all of whom are higher-cost producers, which taxes American middle class consumers," Roach said.