Trump tweeted Thursday that McMaster has done "an outstanding job & will always remain my friend." He said Bolton will take over April 9.
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Bolton will be Trump's third national security adviser. Trump has clashed with McMaster, a respected three-star general, and talk that McMaster would soon leave the administration had picked up in recent weeks.
His departure follows Trump's dramatic ouster of Secretary of State Rex Tillerson last week. It also comes after someone at the White House leaked that Trump was urged in briefing documents not to congratulate Russian President Vladimir Putin about his recent re-election win. Trump did it anyway.
In a statement released by the White House, McMaster said he would be requesting retirement from the U.S. Army effective this summer, adding that afterward he "will leave public service."
The White House said McMaster's exit had been under discussion for some time and stressed it was not due to any one incident.
Bolton, probably the most divisive foreign policy expert ever to serve as U.N. ambassador, has served as a hawkish voice in Republican foreign policy circles for decades. He met with Trump and White House chief of staff John Kelly in early March to discuss North Korea and Iran. He was spotted entering the West Wing earlier Thursday.
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Bolton has served in the Republican administrations of Ronald Reagan, George H.W. Bush and George W. Bush, and served as a Bush lawyer during the 2000 Florida recount.
A strong supporter of the Iraq war and an advocate for aggressive use of American power in foreign policy, Bolton was unable to win Senate confirmation after his nomination to the U.N. post alienated many Democrats and even some Republicans. He resigned after serving 17 months as a Bush "recess appointment," which allowed him to hold the job on a temporary basis without Senate confirmation.
Tension between Trump and McMaster has grown increasingly public. Last month, Trump took issue with McMaster's characterization of Russian meddling in the 2016 election after the national security adviser told the Munich Security Summit that interference was beyond dispute.
"General McMaster forgot to say that the results of the 2016 election were not impacted or changed by the Russians and that the only Collusion was between Russia and Crooked H, the DNC and the Dems," Trump tweeted Feb. 17, alluding to frequent GOP allegations of impropriety by Democrats and Hillary Clinton.
Tillerson's exit also forecast trouble for McMaster, who had aligned himself with the embattled secretary of state in seeking to soften some of Trump's most dramatic foreign policy impulses.
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McMaster told The New York Times last year that Trump's unorthodox approach "has moved a lot of us out of our comfort zone, me included."
The military strategist, who joined the administration in February 2017, has struggled to navigate a tumultuous White House. Last summer, he was the target of a far-right attack campaign, as conservative groups and a website tied to former Trump adviser Steve Bannon targeted him as insufficiently supportive of Israel and not tough enough on Iran.
McMaster was brought in after Trump's first national security adviser, Michael Flynn, was dismissed after less than a month in office. White House officials said he was ousted because he did not tell top advisers, including Vice President Mike Pence, about the full extent of his contacts with Russian officials.