Nationality vs. Ethnicity

I don't know about you, but I have pet peeves...and while I don't like to have petpeeves because they can be trivial sources of irritation, there is a particular one that happens time and time again. This one in particular, is whenever someone asks me,

"What's your nationality?"

The conversation usually goes as follows:

Stranger: Excuse me, what's your nationality?
Me: I'm American.
Stranger: No no, where are you FROM?
Me: ...California.
Stranger: Nooo, I mean, like your parents!
Me: My dad was born in Los Angeles...
Stranger: But aren't you from like, Japan?

It drives me a little nuts. I have no problem with either question, and I'm not even as bothered if people can't tell the differences between Asians or whatever, it's just that they use "nationality" as a suitable substitute for "ethnicity" and it's not the same thing! I'm not saying that I know every vocab word in the English language, but I feel like being American and all, nationality and ethnicity should be in our common word bank.

Am I alone on this?