By Jeff Mason and Steve Holland
WASHINGTON/HAGERSTOWN, Md. (Reuters) - President Donald Trump on Friday fired his chief strategist Steve Bannon in the latest White House shake-up, removing a far-right architect of his 2016 election victory and a driving force behind his nationalist and anti-globalization agenda.
Bannon's firing, a year and a day after Trump hired him as his campaign chief, put an abrupt end to the rabble-rousing political provocateur's tumultuous tenure in a White House riven with rivalries and back-stabbing during which he clashed with more-moderate factions.
He was instrumental in some of Trump's most contentious policy moves including the ban on people from several Muslim-majority countries, abandoning the Paris climate accord, tearing up international trade agreements and cracking down on illegal immigration. He was no friend of the Republican political establishment and was loathed by liberals but was a darling of some of the president's hard-line conservative supporters.
White House officials said Trump had told new Chief of Staff John Kelly to crack down on the bickering and infighting, and that Bannon's fate was sealed by comments published on Wednesday in the American Prospect liberal magazine in which he spoke of targeting his adversaries within the administration.
Trump, seven months into his presidency, has become increasingly isolated over his comments following white supremacist violence in the Virginia college town of Charlottesville last Saturday and his attacks on fellow Republicans. Some Republicans had even begun questioning Trump's capacity to govern.
As Trump came under fire from Republicans including two former presidents, and from business leaders and U.S. allies abroad, he faced mounting calls for Bannon's ouster. Critics had accused Bannon of harboring anti-Semitic and white nationalist sentiments.
"White House Chief of Staff John Kelly and Steve Bannon have mutually agreed today would be Steve's last day," White House spokeswoman Sarah Sanders said in a statement.
Bannon returned to his post as executive chairman of right-wing Breitbart News on Friday afternoon, the website said. Prior to joining the Trump campaign, he had spearheaded Breitbart's shift into a forum for the "alt-right," a loose online confederation of neo-Nazis, white supremacists and anti-Semites.
Bannon said his departure from the White House signals a major shift for the Trump agenda. "The Trump presidency that we fought for, and won, is over," Bannon told the conservative Weekly Standard.
"I just think his ability to get anything done - particularly the bigger things, like the wall, the bigger, broader things that we fought for, it's just gonna be that much harder," Bannon said.
He said he would use Breitbart to attack opponents of the populist and nationalist agenda he championed, including establishment Republicans. "I am definitely going to crush the opposition," Bannon said.
He became the latest key figure to abruptly depart a Trump White House that has been chaotic from its first days and already has lost a chief of staff, a national security adviser, two communications directors and a chief spokesman.
Trump's presidency also has been dogged by ongoing investigations in Congress and a special counsel named by the Justice Department into potential collusion between his presidential campaign and Russia, something both Trump and Moscow deny.
Bannon, 63, is a former U.S. Navy officer, Goldman Sachs investment banker and Hollywood movie producer.
He had been in a precarious position before but Trump opted to keep him, in part because he had played a major role in Trump's November 2016 election victory over Democrat Hillary Clinton and was backed by many of the president's most loyal rank-and-file supporters.
Democrats cheered Bannon's departure.
"Steve Bannon's firing is welcome news," said Nancy Pelosi, the top House of Representatives Democrat. "The Trump Administration must not only purge itself of the remaining white supremacists on staff, but abandon the bigoted ideology that clearly governs its decisions."
Wall Street indexes and the U.S. dollar ended a volatile session lower after a week of drama in Washington intensified doubts about Trump's ability to deliver on policy objectives such as tax cuts. After a late-morning boost following reports of Bannon's ouster, the dollar and U.S. equities lost ground.
Bannon felt a close ideological connection to Trump's populist tendencies and "America First" message. Like Trump, he has also expressed deep skepticism concerning ongoing American military involvement in Iraq and Afghanistan.
The decision to fire Bannon could undermine Trump's support among far-right voters but might ease tensions within the White House and with party leaders. Republicans control the White House and both chambers of Congress but have been unable to pass major legislative goals including a healthcare overhaul.
Trump ran into trouble after saying anti-racism demonstrators in Charlottesville were as responsible for the violence as the neo-Nazis and white supremacists who instigated the protests, and that there were "very fine people" among both groups.
Those remarks sparked rebukes from fellow Republicans, top corporate executives and some close allies.
Bannon's departure removes a large source of friction on the White House staff, but does not herald a significant shift by Trump toward the center on major policy issues, three administration officials said.
"A good deal of what was attributed to Bannon, for example on China trade and restricting immigration, and the border wall, all came before Bannon joined the campaign and would have happened without him," said one White House official, speaking on the condition of anonymity.
Bannon has been a hawk on China, urging a tougher line on trade to correct a huge trade imbalance and dismissive of recent efforts to try to elicit Beijing's help to rein in North Korea. In his comments to American Prospect, Bannon said the United States was in an economic war with China.
A second official said the biggest winners from Bannon’s departure are national security adviser H.R. McMaster; Gary Cohn, Trump’s chief economic adviser; and Trump’s daughter Ivanka and her husband, Jared Kushner.
Bannon's departure cast a cloud over the future of the group of allies he had brought into the White House, such as Sebastian Gorka.
Some conservative activists expressed disappointment in Bannon's ouster. Republicans were largely quiet, though moderate Republican congresswoman Ileana Ros-Lehtinen said she was glad Bannon was out but that the administration "must work to build bridges, not destroy them."
By the time Trump had hired Bannon as campaign manager, the real estate magnate had already vanquished his Republican opponents for the party's presidential nomination.
Asked about Bannon on Tuesday, Trump called him "a friend of mine" but downplayed his contribution to his election victory.
"Mr. Bannon came on very late. You know that. I went through 17 senators, governors and I won all the primaries. Mr. Bannon came on very much later than that. And I like him. He is a good man. He is not a racist," Trump said.
(Reporting by Steve Holland and Jeff Mason; Additional reporting by Makini Brice, Susan Heavey, John Walcott, david Brunnstrom, Megan Davies, Justin Mitchell, Mohammad Zargham and David Alexander; Writing by Will Dunham and Eric Beech; Editing by James Dalgleish and Diane Craft)