In January of 1951, the PRC began making offers of peace. The outreach was limited, China asked for a 7-power conference to be held on the issues of the fate of Korea and Formosa's, as well as on the question of a Chinese UN seat. The Americans, who considered the Chinese nationalists on Formosa to be the rightful government of China, did not want to give China a seat in the UN; the US rejected the PRC's offer for peace. Instead, at Truman's prompting, the UN censured the PRC for aggression.
On his own, MacArthur decided to go even further in antagonizing the Chinese. In March, without consulting Washington, he decided to send an ultimatum to the PRC. MacArthur demanded that the Chinese withdraw their troops. If they didn't, he promised to force China to its knees. Truman was incensed at MacArthur's rogue attempt to define and influence US policy; he decided MacArthur had to be fired. Truman did not act immediately, however, and as he waited, in early April of 1951, Congress approved NATO, a sign that Truman's Europe-first policy had been accepted. By this time the incident of the ultimatum had become worn-out, and Truman needed another reason to fire MacArthur.
Within a few months, MacArthur leaked news to a congressman that he planned to use Chinese Nationalist forces from Formosa in the Korean War. Such an act, of course, would only serve to further enflame the PRC, and it again went against Truman's diplomatic policies. After the congressman, Jospeh W. Martin, read MacArthur's message before Congress, Truman began talking about dismissing MacArthur with the JCS (Joint Chiefs of Staff). Meanwhile, in Operation Rugged, General Matthew Ridgway was busy entrenching the Eighth Army in favorable terrain about 20 miles north of the 38th Parallel. Ridgway was preparing to hold off another PRC offensive, which many American military leaders suspected was imminent. The JCS was increasingly afraid that MacArthur's tactless reaction to such an offensive might allow the situation to grow into a major conflict, perhaps a World War III. Making sure of support within the JCS, which unanimously supported MacArthur's dismissal, Truman fired MacArthur on April 11, 1951.
Truman made every effort to dismiss MacArthur in a polite and political way. However, transmission of the message was botched, and MacArthur probably received the news secondhand before hearing direct from the President. Republicans and American fans of MacArthur were very upset by their hero's dismissal; Republicans nearly brought impeachment hearings against Truman, but were prevented because the JCS stood unanimously behind his decision. Nonetheless, MacArthur was welcomed home as a hero, with massive parades. From May 3 to January 25, 1951, the Senate Foreign Relations Committee convened to look into the circumstances surrounding MacArthur's firing. Ultimately, the committee found that MacArthur's dismissal was justified.
By early 1951, Truman really wanted to end the Korean War, of which Americans were becoming more and more weary. MacArthur's unilateral decision to threaten the PRC angered Truman because it only made the Chinese more resolved to stay in the war. MacArthur, acting without consulting Washington first, was becoming more and more undependable, although his assumption that Stalin and the USSR would stay out of fighting with the US ended up being correct. It is hard to say why MacArthur acted so haphazardly, although it might be the case that since he knew he was nearing the end of his career, he wanted to make himself into a martyr. Some may argue that he was deliberately trying to be dismissed so that he would become a Republican hero who could then run for President. Regardless, MacArthur went against his President's orders, given in person at Wake Island, to use tact and caution. Oddly, MacArthur decided to violate his constitutional duty to serve his commander-in-chief in order to protect his country, a country whose politics is largely based on the sanctity of that constitution.
Building an anti-MacArthur coalition with the JCS was a crucial move for Truman. MacArthur, hero of the Republican Party and wildly popular with the American public, could not be fired on a whim. Truman's consultation with the JCS proved to be extremely wise, for after MacArthur's dismissal, many Republican congressmen began to suggest removing Truman through impeachment. Fortunately for Truman, his support within the JCS, the American military's most senior group, saved him from impeachment. While personally wise, Truman's actions also had political effects. In standing beside Truman and perhaps saving him from impeachment, the JCS gained a political power it had not previously held. In following decades, Presidents would seek the advice of the JCS on military decisions to protect themselves from political fallout should the operation go badly.