My theory is that he always suspected it. They were loyal, even friends, but it was never 100% trust because it couldn't be. They weren't family, and outsiders can never be completely trusted (incidentally this is also why I thought Fredo's betrayal hurt Michael more than anything else; as family, Fredo SHOULD have been beyond reproach). So it probably came down to, as Michael felt as well, that it was business and the "smart move". It wouldn't have hurt any less (you can kind of tell that Michael is disappointed that he has to have Tessio killed, but it's business not personal. As Tessio even said before being led away) but it would have been necessary. It's the life they chose.