It is makruh not only in the Hanafi madhab but also other madhabs. See Are inter-religious marriages encouraged in islam? for references.
Regarding the Hanafi Madhab:
Shami writes in Radd al Muhtar that it is considered Makruh Tanzihi to marry a Dhimmi Kitabee (Dhimmi means subject of the Islamic State) and Makruh Tahrimi to marry a Harbi Kitabee (Harbi means from the Dar ul Harb, a country at war with the Islamic state).
وصح نكاح كتابية ) ، وإن كره تنزيها)
Nikah is correct with a Kitabee. Though it is Makruh Tanzihi
والأولى أن لا يفعل يفيد كراهة التنزيه في غير الحربية ، وما بعده
يفيد كراهة التحريم في الحربية تأمل
The Karahat (dislike) is tanzihi when with a non-harbi ... and the
karahat is tahrimi when with a harbi.
The reason for the second case being disliked is explained in Tafsir Al Jassass as the conflict that such a marriage would entail between the following commands:
The command to be stern with them:
Quran 58:22 You will not find a people who believe in Allah and
the Last Day having affection for those who oppose Allah and His
Messenger, even if they were their fathers or their sons or their
brothers or their kindred. Those - He has decreed within their hearts
faith and supported them with spirit from Him. And We will admit them
to gardens beneath which rivers flow, wherein they abide eternally.
Allah is pleased with them, and they are pleased with Him - those are
the party of Allah . Unquestionably, the party of Allah - they are the
Quran 9:29 Fight those who do not believe in Allah or in the Last
Day and who do not consider unlawful what Allah and His Messenger have
made unlawful and who do not adopt the religion of truth from those
who were given the Scripture - [fight] until they give the jizyah
willingly while they are humbled.
The command to treat wives with kindness and affection:
Quran 30:21 And of His signs is that He created for you from
yourselves mates that you may find tranquillity in them; and He placed
between you affection and mercy. Indeed in that are signs for a people
who give thought.
Quran 4:19 ... And live with them in kindness. ...