The administration plans to overturn its nomination of Admiral Harry Harris for the role of US ambassador to Australia, instead nominating him as envoy to South Korea ahead of President Trump's meeting with North Korean leader Kim Jong-Un.
"(It) basically says Australia, from President Trump's perspective, is a second-class ally," Rudd told ABC's 7.30 program.
The former prime minister said the last minute decision sends "a bad signal" about Australia's importance in the eyes of the Trump administration.
"To chop and change at the last minute like this and take a good candidate, Admiral Harry Harris, and take him from our grasp and send him to Seoul is, I think, a bad signal to the wider public community in Australia about the importance which this Trump administration attaches to Australia," he said.
"There is a danger that the Trump administration begins to take Australia for granted."
But Prime Minister Malcolm Turnbull shot down these claims, saying the comments "says something about Mr Rudd".
Turnbull said the decision, while disappointing, was understandable.
"I'm disappointed that Harry's not coming because he is a really good friend and I think Harry will be disappointed that he is not coming to Canberra too because he loves Australia," the PM said while in France for Anzac Day commemorations.
"But look he is a guy of enormous experience and ability and given the situation on the Korean Peninsula, given the tensions there I can well understand why the President has decided that the admiral's expertise and experience is going to be put to better use in Korea than in Australia."
Turnbull has not spoken to President Trump since Admiral Harris was announced as the new US Ambassador in South Korea, but stressed there has been no change to the US-Australia relationship.
"I haven't spoken to the President since the announcement was made. But I'm sure they will move on to another to another announcement, but I have to say the charge d'affaires, Jim Caruso, I think you all know is doing a fantastic job," he said.
"You know the relationship between Australia and the United States, as you well know as well as I do, is so deep it's so intense it operates at so many levels. The absence if you like of an ambassador as opposed to a charge d'affaires is not really troubling the very strong relationship we have whatsoever."