President Donald Trump's hard-line stance in the U.S. trade war with China has paid off, former White House advisor Steve Bannon told CNBC on Wednesday.

Trump "stood up for the tariffs and he broke the Chinese Communist Party," said Bannon, ex-Trump chief strategist and longtime China critic. He also used to run far-right Breitbart News.

Top trade representatives from the U.S. and China were set to gather at the White House on Wednesday morning to sign the "phase one" deal.

"It's only phase one, but directionally this thing is powerful," Bannon said.

The initial agreement between the world's two largest economies is expected to touch on tariff relief, China's promise to purchase some $200 billion of U.S. goods over two years, and changes to intellectual property and technology rules. The deal is also expected to lower structural barriers for American companies hoping to do business in China.

"We gave up very little in the end," said Bannon, who appeared on "Squawk Box" with Kyle Bass, a like-minded China hawk and hedge fund manager.

Bass, founder of Hayman Capital Management, said he sees the phase one deal as a "temporary truce," in which the U.S. got the better of China. He also said the agreement buys both sides time politically to keep talking.

"I know it's billed as we're looking as bringing the sides together, but China gave into a lot," Bass added.

The two spoke shortly after Treasury Secretary Steven Mnuchin told CNBC that he would expect a future "phase two" trade deal with China to ease U.S. tariffs further.

"Just as in this deal there were certain rollbacks, in phase two there will be additional rollbacks," Mnuchin said. "It's really just a question of, and we've said before, phase two may be 2A, 2B, 2C. We'll see."

"The first step is really focusing on enforcement, but this gives China a big incentive to get back to the table and agree to the additional issues that are still unresolved," the Treasury secretary added.