Many people don't try to understand the difference between these two religions.
Arabs are more traditional and the their grounds are more rooted whereas the Muslim community practices Islam.
Any typical American would confuse these two terms and would not bother about it.
This type of generalization can lead to negative categorization also. To be honest, many Indians also wouldn't know the difference between a Muslim and an Arab, and this goes without saying that I'm talking about the Hindu groups especially.
Meaning of Orientalism:
The confusion of categorizing these two groups itself is known as orientalism.
Stereo-typing these two groups into one has been extremely problematic especially since the September 11th attack. Many of the American citizens have been wary about these two groups. Large numbers of Arab's and Muslims were detained and questioned in depth for long hours, and many arrested based on assumptions. Ironically though, many of those who were arrested were American
Many Americans now are wary of these two groups and have type-casted them as terrorists. That's not the case only, civil rights to these groups is still a matter of conflict.
In 2007, a bill known as The Violent Radicalization and Homegrown Terrorism Act had been passed in order to investigate terrorism, but it was later accused and opposed by the then senator Jon Tester stating that due this bill, it would cause the barging and breaking down of many doors and wrongly invading the homes of many innocent citizens and accusing them of crimes that they potentially couldn't have done.
What can be done
Suggestions that could be put forward to citizens all over the world regarding such an issue would be to first educate the masses about these two religions.
Ignorance can breed such high negative thoughts.
In order to maintain tolerance with these groups, people must be educated from the very beginning, and by beginnings I mean that from the childhood children should be educated about the various religions thereby not allowing them to grow up into citizens who become blind accusers.
We should educate children to allow them to be tolerable and produce another tolerable generation.