Let's see the previous and next verse, shall we?

They but wish that ye should reject Faith, as they do, and thus be on the same footing (as they): But take not friends from their ranks until they flee in the way of Allah (From what is forbidden). But if they turn renegades, seize them and slay them wherever ye find them; and (in any case) take no friends or helpers from their ranks;– Except those who join a group between whom and you there is a treaty (of peace), or those who approach you with hearts restraining them from fighting you as well as fighting their own people. If Allah had pleased, He could have given them power over you, and they would have fought you: Therefore if they withdraw from you but fight you not, and (instead) send you (Guarantees of) peace, then Allah Hath opened no way for you (to war against them). Others you will find that wish to gain your confidence as well as that of their people: Every time they are sent back to temptation, they succumb thereto: if they withdraw not from you nor give you (guarantees) of peace besides restraining their hands, seize them and slay them wherever ye get them: In their case We have provided you with a clear argument against them. (YUSUF ALI Translation, Quran 4:89-91)

When we read it in context, verse 4:89 is NOT to those “who join a group between whom and you there is a treaty (of peace), or those who approach you with hearts restraining them from fighting you as well as fighting their own people.” This verse is only referring to those “withdraw not from you nor give you (guarantees) of peace besides restraining their hands”.

Dr. Muzammil H. Siddiqi says with regards to this verse:

“Now tell me honestly, do these verses give a free permission to kill any one anywhere? These verses were revealed by God to Prophet Muhammad (peace and blessings be upon him), at the time when Muslims were attacked by the non-Muslims of Makkah on a regular basis. They were frightening the Muslim community of Madinah. One may say using the contemporary jargon that there were constant terrorist attacks on Madinah and in this situation Muslims were given permission to fight back the “terrorist”. These verses are not a permission for “terrorism” but they are a warning against the “terrorists.” But even in these warnings you can see how much restraint and care is emphasized.”