In Season Two, it is definitively revealed that he was with the Americans in WWII.
In S2E05, he meets with Inspector Kido who questions him about a medal displayed in his office:
Kido: The medal behind your desk. Might I examine it more closely?
Smith: Be my guest.
(Kido gets a closer look at the medal, which is dated 1942)
Kido: The Solomon Islands. Why display a medal from your U.S. military service?
Smith: I keep it as a reminder. The consequences of the failure of command.
Kido: There were many casualties of that campaign. On both sides.
In S2E10, it's revealed that he witnessed (from afar) the nuclear attack on Washington D.C. on December 11, 1945. He can be seen wearing his uniform.
Just prior to this event, he spoke to his (then pregnant) wife of going to the Pentagon:
Helen: You were supposed to be there hours ago.
John: Ah, that's fine, I'll just go straight to the Pentagon in the morning.
So while it's possible he had Nazi sympathies before the war, he did serve on the U.S. side until the surrender. Because of the nuclear attack, that he escaped, he may well have been one of the highest ranking military officers in the region and a swift capitulation might have seemed to be the best route to ensuring the continued safety of his family.