Yes, I agree that it would be better to return the Nitto and get something else.
I disagree that using the headset size to define the stem size is universally used. Perhaps in bike industry internal terminology. However, I can post a dozen links if so desired that state the outside diameter for the actual stem itself.
FWIW, the headset top nut is exactly 1 1/8ths, I went back and measured that too just for kicks. In the future, I will seek exact clarification on whether sellers are referring to the headset size or the stem diameter.
I have quite a few Nitto stems kicking around. I guess I just got lucky up until now and I never had to actually think about fitment sizes. So I learned something in that regard.