Trump threatened on the social media platform to bring in the National Guard to control the situation in Minneapolis following the death of a black man in a confrontation with police. Demonstrations turned to rioting in one police precinct in the city.
In one tweet, Trump said: "When the looting starts, the shooting starts."
In explaining its decision to add the public interest tag, Twitter said: "We've taken action in the interest of preventing others from being inspired to commit violent acts, but have kept the Tweet on Twitter because it is important that the public still be able to see the Tweet given its relevance to ongoing matters of public importance."
Trump's tweet is now hidden behind a notice claiming it breached Twitter's policies on "glorifying violence." It can still be viewed and retweeted with a comment, but users cannot like, reply to or retweet it.
Shares of Twitter were down 1.7% on Friday morning.
On the third night of the protests late Thursday, the Minneapolis Police Department's 3rd Precinct, the base of the four officers fired following George Floyd's death in their custody, was set on fire. Multiple blazes have been seen on nearby blocks.
In two tweets, Trump threatened to bring in the National Guard to control the situation.
"I can't stand back & watch this happen to a great American City, Minneapolis," he said, blaming Mayor Jacob Frey for social unrest in the city.
"....These THUGS are dishonoring the memory of George Floyd, and I won't let that happen," Trump tweeted. "Just spoke to Governor Tim Walz and told him that the Military is with him all the way. Any difficulty and we will assume control but, when the looting starts, the shooting starts. Thank you!"
Floyd died Monday after an officer knelt on the man's neck during an arrest. He was seen on video telling officers "I can't breathe."
Twitter said it took issue with the "historical context" of the last line of the tweet it flagged Friday. Trump appeared to quote former Miami Police Chief Walter Headley, who in December 1967 used the phrase, "When the looting starts, the shooting starts."
Headley was head of police during racially charged protests and was known for using "stop-and-frisk" policies.
The White House's official Twitter account later retweeted Trump's first post with the content that was hidden by the microblogging site for violating its policies. Twitter has now hidden this tweet as well.
The White House account hit back at the company, claiming it "has determined that it will allow terrorists, dictators, and foreign propagandists to abuse its platform." It included a picture of a post from Iran's supreme leader, Ali Khamenei.
Trump has been upping the pressure on Twitter after the platform fact-checked misleading claims made by the president on Tuesday regarding mail-in voting. He signed an executive order on social media "censorship" Thursday, targeting companies granted liability protection through Section 230 of the Communications Decency Act.
The order could give regulators the power to pursue action against platforms like Twitter and Facebook, holding them responsible for content posted by their users.
Following the action taken by Twitter, Trump reiterated his wish to have Section 230 revoked. He said the platform was specifically targeting conservatives, but Twitter and other social media platforms have long denied claims of political bias.
Twitter CEO Jack Dorsey was informed of the decision to label Trump's tweet in advance, a spokeswoman for the company told CNBC. Dorsey has stated that he is the one who is "ultimately accountable for our actions as a company."