When asked by a British reporter ahead of a meeting with UK Prime Minister Keir Starmer at the White House whether the two leaders would be discussing AUKUS, Mr Trump responded "what does that mean?"
The trilateral security pact will see Australia obtain nuclear submarines through a partnership with the US and UK.
Australia will spend up to $368 billion to acquire the submarines.
When later prompted about what AUKUS was, Mr Trump said the submarine deal would be discussed and that "we've had a very good relationship with Australia".
But Australia's prime minister said the comments were not a concern, reiterating the strength of Australia's alliance with the US and UK.
"There's a lot of acronyms in this business, and you know, we all get thrown at them from time to time," Mr Albanese told reporters in Sydney on Friday.
"(Mr Trump) went on to speak about the really important and positive relationship with Australia. That's consistent with the discussions that I've had with President Trump."
Mr Albanese and Mr Trump previously spoke about AUKUS when the pair had a phone conversation earlier in February, which also centred on possible tariff exemptions for Australia on steel and aluminium.
Employment Minister Murray Watt dismissed concern about the US president not knowing immediately what AUKUS was.
"I wouldn't make too much about a president with a very full plate not remembering one acronym. I think all of us go through that sort of thing at different times," he told ABC Radio on Friday.
"You'll see there that he was able to say very quickly about the strength of the relationship with Australia and the fact that AUKUS will be something he'll be discussing with the British prime minister."
Australia paid the US almost $800 million in February as part of the first payment of the AUKUS deal.
Opposition Leader Peter Dutton said the Australian alliance with the US was still strong.
"Not everyone you know gets the acronyms, and all the rest of it, but there's no doubt in my mind that the president strongly supports the alliance between our three countries and strongly supports AUKUS," he told Nine's Today program.
"He stated that previously and the submarine deal ... will underpin the national security of our country for the next century."
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