UPDATE 2-Trump calls Canada's Trudeau 'two-faced' over jaw-dropping video remarks

* Trudeau jokes about Trump in Buckingham Palace

* Trump says Trudeau is "two-faced"

* Trump later jokes about insulting Trudeau (Adds Trudeau, Trump remark)

By Steve Holland and William James

WATFORD, England, Dec 4 (Reuters) - U.S. President Donald Trump called Justin Trudeau "two-faced" on Wednesday after the Canadian Prime Minister appeared to be caught on camera joking about his press appearances during a chat with other leaders at a NATO summit in Britain.

Trudeau was filmed at a Buckingham Palace reception for NATO leaders on Tuesday evening describing how surprised U.S. officials appeared to be by Trump's performance at an earlier news conference.

The conversation, which involved Trudeau, British Prime Minister Boris Johnson, French President Emmanuel Macron, Dutch Prime Minister Mark Rutte and Queen Elizabeth's daughter Anne, was recorded on video and snippets were audible.

"Is that why you were late?" Johnson asked Macron.

"...It was like a 40-minute press conference," Trudeau said. "Yeah, yeah, yeah! Forty minutes."

Other words were exchanged but could not be heard, before Trudeau added with a chuckle: "I just watched his team's jaws drop to the floor."

Asked on Wednesday if he had heard Trudeau's remarks about him, Trump said: "He's two-faced".

He suggested that Trudeau was upset because he had challenged him for failing to meet the target of spending 2% of national output on defence.

"I find him to be a very nice guy but you know the truth is that I called him out over the fact that he's not paying 2% and I can see he's not very happy about it," Trump said at a news conference alongside German Chancellor Angela Merkel.

Trump later appeared to make light of his own remarks about Trudeau.

"That was funny when I said the guy's two-faced," the president was caught saying on an audio clip following a lunch with some of the NATO leaders.

At a final news conference, Trudeau played down the incident, saying he and Trump had enjoyed a great meeting and that the jaw-dropping comment was a reference to the announcement of the location of the next meeting of G7 leaders at the U.S. presidential retreat, Camp David.

"Last night, I made a reference to the fact there was an unscheduled press conference before my meeting with President Trump, I was happy to take part in it but it was certainly notable," Trudeau told reporters.

"We were all surprised and I think pleased to learn that the next G7 will be at Camp David, I think that was an unscheduled announcement and... I think every different leader has teams who every now and then their jaws drop at unscheduled surprises, like that video itself for example." (Writing by Michael Holden; editing by Stephen Addison)