My mother loved the Taco Bell Chihuahua, we had like a half dozen talking plushes of him saying different things.
Was it racist? kinda probably yeah a bit, but it wasn’t hateful.
Trafficking in stereotypes at most?
It may not do to assume. I mean, at one point everyone blithely assumed that Mexicans found Speedy Gonzales to be racist and there was a (completely white-led) little backlash against him until someone got around to actually asking some Mexicans about it and discovered that he was actually broadly popular with that demographic.
In general people really like seeing themselves on the TV and understand exaggerated stereotyping for comedic effect. Mama mia boopity bopy, as my ancestors would say.
yells in italian
…silently, by making threatening hand gestures