It's not racist unless you go out of your way to make it so.
It depends on circumstances. If it comes up during conversation, then asking is totally okay. If you imply that being foreign is somehow bad, then it's racist.
For example... my neighbours are arabic, most likely muslims. I've talked with them about quite a few things but never once asked where they come from or what they do in here. It's not my business and unless they mention something, I'm not going to ask.
If "Where are you from?" was the first thing I said to them, then that would have been rude, but not racist.
The issue is that sometimes people who don't look northern European (i.e. Hispanic or Asian) are sometimes asked what country they are from, even when they were born in the country of the person asking the question. Its offensive because the person isn't just curious about their ethnic background, they are also assuming that the person is a foreigner just based on their appearance. Doubly so if the person answers that they are American or Canadian or what have you, and the person who asked the question follows it up with, "No really, what country are you from?"
To be fair though this is problem in many countries and isn't just exclusive to Western nations. Its also common in Japan for example for people who are mixed Japanese and American or European descent to be called foreigners, even if they were born and raised in Japan.
I dated a girl for awhile who had an American father and a Okinawan mother, and even though she was born and raised in Okinawa and spoke Japanese like a native, she was often called a foreigner. Some people would even correct her if they asked her where she was from and she said Japan. "No, that can't be. You're a foreigner. What country are you really from?" Ect.
That sort of thing is offensive to people because even if the person asking the question isn't intending to be ignorant, its sending a message that, "You aren't one of us and don't belong."





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