US officials have said TikTok, under its Chinese parent, poses a national risk because of the personal data it handles. Trump said on Friday he was planning to ban TikTok in the United States after dismissing the idea of a sale to Microsoft.
In an earlier interview with Fox News Channel, Navarro said any potential buyer of TikTok that has operations in China could be a problem.
Navarro cited Microsoft's Bing search engine and Skype platform, saying they "effectively are enablers of Chinese censorship, surveillance, and monitoring."
Microsoft has over 6,000 employees in China and offices in Beijing, Shanghai, and Suzhou.
While the company has been there for decades, business from China accounts for just over 1 percent of the company's revenue, Bloomberg reported Microsoft President and Chief Legal Officer Brad Smith stating at a conference in January.
Widespread piracy of Windows and Office once prevented the company's cash cow from bringing in money.
The company is now pushing its Azure cloud service to customers in China, via a partnership with local data service provider 21Vianet.
Its crown jewel is arguably a research center in Beijing, which has produced a number of alumni who have gone on to executive positions at Alibaba, ByteDance, Xiaomi, and facial recognition unicorns Sensetime and Megvii.
It also was the site of origin for the so-called "ResNet" paper, currently the most-cited AI paper according to Google scholar metrics.