"They're trying to see whether the president will stick to the things he said are nonnegotiable or whether coming up to an election he'll start to negotiate points he said were nonnegotiable," Puzder told " Power Lunch ." "They'll find this president has the courage of his convictions," said Puzder, who was Trump's pick for Labor secretary before he withdrew amid opposition from Republican senators.

He believes China and the European Union are looking to the U.S. midterm elections in November. If Democrats gain control of the House of Representatives, the party may try to impeach the president, said Puzder, now a policy advisor at pro-Trump group America First Policies. He was formerly CEO of CKE Restaurants, which owns the Hardee's and Carl's Jr. chains.

Europe and China are testing President Donald Trump 's resolve on trade but they will likely be disappointed, former fast food CEO Andy Puzder told CNBC on Friday.

Trade tensions have been escalating between the U.S. and the rest of the world. Trump's latest salvo was aimed at the European Union on Friday, when he threaten to impose tariffs on car imports if the EU doesn't remove duties on American autos.

Trump tweet

Earlier in the day, the EU slapped penalties on a range of U.S. goods, including bourbon and motorcycles. The move was in response to the U.S. tariffs on steel and aluminum imports from the EU.

Meanwhile, Trump's most recent threat against China came on Monday, when he asked the U.S. trade representative to identify $200 billion worth of Chinese imports for tariffs. The duties would be in addition to ones that were previously announced, including a 25 percent tariff on up to $50 billion of Chinese products.

Chinese state media on Friday said U.S. protectionism is self-defeating and a "symptom of paranoid delusions."

Puzder believes it important for the U.S. to level the playing field when it comes to trade. While American consumers benefit from lower-priced goods when other countries send inexpensive products to the U.S., there is another side to the story, he noted.

"The problem is the people that elected Donald Trump — the people in Pennsylvania, Michigan, Ohio, Wisconsin, working-class people — they get all the pain from those prices going lower. They lose the jobs. They lose the businesses," he said.

Puzder acknowledged the president has a lot to lose politically if his tactics don't work.

However, he said there is a lot to gain if Trump sticks to his convictions — it just may not be gained until after the November elections.

"There is a risk and this president seems to be willing to take risks if he can do what he believes are in the best interests of the American people," Puzder said. "And he firmly believes that with respect to his trade policies."

— Reuters contributed to this report.