Yes, it's cultural appropriation. It's not the same as dressing up as a Roman or a Viking because it perpetuates the misinformation that Native American cultures are dead or frozen in the past. Ceremonial Native American garb has real meaning to contemporary people. It is not our place to make a mockery of it. Having a white person where it as a carnival costume is necessarily an inappropriate context for that type of outfit.
Plus, setting aside the spiritual meanings, it's about as sensitive as dressing up as an Arab or Chinese person.
Serious question. The hotel down the street from my office makes most of the male staff wear traditional Highland dress. Is that a racist appropriation of my Scottish culture?