To be honest, I'm not sure if people are complaining specifically because it's racist per se, it just sounds like a bad costume. I'm from the US, and I don't think I can think of someone actually dressing up as "German" or "Mexican" or "Swedish" or "British" for halloween. It just sounds kind of boring. I don't think we typically do it, at least in my circles.

Maybe people are thinking of it as racist because they're mentally comparing it to black face, which is pretty obviously racist. Maybe they're just saying it's supporting disproven stereotypes that hurt minorities. Maybe they feel it's distasteful, but can't explain why. In any case, it's definitely not a costume I would recommend wearing.