Steve Bannon, the US President’s top aide, also contradicted Mr Trump’s threat to rain “fire and fury” on North Korea, saying there is “no military solution” to the crisis.
He reportedly phoned a journalist from the Prospect magazine and made the remarks in a conversation he now says was off the record.
Mr Bannon, who formerly led the right-wing website Breitbart, dismissed the grip of white supremacy on America when asked about violence at the Virginia far-right rally that left one person dead.
“Ethno-nationalism – it’s losers,” he said.
“It’s a fringe element. I think the media plays it up too much, and we gotta help crush it, you know, uh, help crush it more.”
“These guys are a collection of clowns.”
Mr Trump has faced criticism, including from Prime Minister Theresa May, for taking two days to explicitly condemn neo-Nazis and the KKK who marched in Charlottesville.
He then appeared to back-pedal, reverting a day later to the claim there was blame on “both sides”.
Mr Bannon said focusing on race would help the Republicans politically.
“The Democrats, the longer they talk about identity politics, I got ’em. I want them to talk about racism every day. If the left is focused on race and identity, and we go with economic nationalism, we can crush the Democrats.”
In a wide-ranging interview, Mr Bannon took aim at Mr Trump’s stance on North Korea.
“Until somebody solves the part of the equation that shows me that ten million people in Seoul don’t die in the first 30 minutes from conventional weapons, I don’t know what you’re talking about,” he reportedly said.
“There’s no military solution here, they got us.”
Mr Bannon also reportedly declared that China was “crushing us”, and the US would “run the tables on these guys” in a bid to win an “economic war”.
With hallmarks of the infamous interview given by then-White House press secretary Anthony Scaramucci that triggered his removal 10 days into the job, Mr Bannon also boasted about firing fellow senior officials in the defence and state departments.
But Mr Bannon’s own future is in doubt, amid reports that Mr Trump is considering firing him.
Mr Bannon said he never intended for his comments to be made public. The Prospect magazine reporter, Robert Kuttner, said the issue on whether the conversation was on the record never came up.