Seriously, I’ve been called an ILLEGAL for being from a Spanish-speaking country and coming to the U.S. with paperwork. Also, my friend’s weird dad saw my name on a social media account when my friend was texting me and he said I was a “typical Mexican”. I am a white European Spanish woman, why do people assume I’m automatically Mexican?
It’s not as simple as “they’re stupid” (which they are.) It’s a symptom of their in-group vs out-group thinking pattern. They don’t think the differences between other countries matter, because they’re all “others” as far as they’re concerned. So they paint foreigners with the same brush and leave it at that.
As to why “Mexican” in used in particular, I think other commenters make a good point about Mexico being the most prominent Spanish-speaking country to people in the US. They don’t see as many people from Spain, so that’s off their radar. If my upbringing in a racist area is anything to go by, “Mexican” became the default long ago.
It is just that simple.