"This is not in the American interest and I do think it's the president putting his personal, political interests at home over the issues of our nation," said Burns, who also advised the administrations of George H.W. Bush and Bill Clinton and worked in the U.S. Jerusalem consulate in the 1980s.

Burns, who served as U.S. ambassador to NATO and was the State Department's third-ranking official during George W. Bush 's presidency, called the decision to recognize Jerusalem as the capital "deeply unwise."

The president made the announcement Wednesday afternoon . Trump also said the U.S. plans to build a new embassy in Jerusalem. The current American embassy is in Tel Aviv.

President Donald Trump didn't act in the best interest of the United States when he formally recognized Jerusalem as Israel's capital, former diplomat Nick Burns told CNBC on Wednesday.

President Donald Trump holds up a signed proclamation after he delivered a statement on Jerusalem from the Diplomatic Reception Room of the White House in Washington, DC on December 6, 2017.

He told "Power Lunch" Trump's move "undercuts every American president" since President Harry Truman, who all understood that the U.S. is the most likely mediator in a peace deal between the Israelis and Palestinians.

The status of Jerusalem — home to sites holy to the Muslim, Jewish and Christian religions — is one of the thorniest obstacles to reaching a peace deal between Israel and the Palestinians.

Israel considers the city its capital and Palestinians want the capital of an independent Palestinian state to be in the city's eastern sector.

"President Trump is now taking sides," Burns said.

He believes that will diminish American credibility among the world's 1.6 billion Muslims.



He's also concerned it may inflame passions against the U.S.

There are also no peace negotiations underway right now, Burns pointed out.

"The president offered this major American concession of 70 years that no one else was willing to make and he appears to have gotten nothing in return," he said. "We have to worry about America's interest here and if you offer a major concession and get nothing in return, then I think you really harmed the United States."

In his announcement, Trump said his decision "is not intended in any way" to hamper a peace agreement.

However, the move has angered leaders across the Middle East, who have voiced concerns about the impact on future peace talks and further destabilization of the region.

Sarah Stern, president of the pro-Israel Endowment for Middle East Truth, hailed Trump's decision.

"This is long overdue," she said in an interview with "Power Lunch."

"We have diplomatic relations with 190 countries. They have all selected where they want to place their capital city, except for Israel," Stern added.

The White House did not immediately respond to a request for comment on Burns' remarks.

— Reuters contributed to this report.