President Trump is a sincere friend of Israel, but his policy of encouraging the settlers would have ended in a disaster if it continued.
There is no chance that Palestinians would ever agree to the Trump plan, and without a legal Israeli-Palestinian border the reality is of one state under Israeli control.
Then inevitably at some time in the future Western nations would have to demand equal civil rights in this one country, exactly as they demanded equal civil rights for blacks in South Africa in the past. There is a fundamental belief that all people are created equal, and this is just as valid for Palestinian Arabs as it is for African blacks.
After the majority rule would be enforced by sanctions, as happened twice before, Israelis would end up a Jewish minority, in a country probably renamed Israel-Palestine. This would be the end of Jewish independence.
America has a strong interest in saving its pro-Western ally, Israel. Therefore, America should use its influence to force a two-state outcome. Then there would be a pro-Western Israel and a pro-Western Palestine, a win for Western interests in the Middle East.
But a one state with an Arab majority would be at best neutral, not pro-Western. Again, new South Africa is an example. The former regime falsely claimed to be an asset for the West, but instead turned out to be a liability.
Of course, fall of Israel would be a tragedy for the Jewish people, and therefore Jews would have to painfully accept that American pressure is far better than losing the Jewish country. American Jews in their majority understand this already, as shown by their support for the Democrats.