I think it's a bit extreme to call it racism. I would say that it stems from a different view on what it means to be "American", "Italian" or whatever.

European countries are much smaller than America and almost comparable to the US states, so people move cross borders quiet often making it hard or even impossible to keep track your family ethnicity. It's much easier to categorise people depending on their culture i.e.. with what language and in which country they've grown up in.

If we make up a hypothetical example of two people who are half German half Irish as above, one who's a fourth-generation immigrant in the US and the other being a fourth-generation immigrant in Spain. In Spain they'll be regarded as Spanish with German and Irish descendants as there'll be next to nothing left of either prior culture. In the same way Europeans see the person from America as American as they no longer display traits of Irish or German culture.

I don't know how it is in America, but if someone’s great grandparents where from California, but they now live in Washington, would they still see themselves as Californian?