What is the upside to US foreign policy to Israel expanding settlement? 

They are not of strategic value to the USA and in fact impose many costs on US foreign policy as they are: (i) extremely unpopular in the Middle East; (ii) very unpopular in the rest of the world; (iii) illegal under every possible sense of the word; (iv) extremely amoral  in and of themselves; and (v) undermine US claims to be acting as an arbiter of the Israeli-Palestinian dispute. 

Israeli annexation of the West Bank or East Jerusalem without citizenship rights for the millions of Palestinian Arabs (already living under Israeli military rule  for 50 years) will further undermine all moral justification for western support for Israel.