The Arizona law causes no harm to US citizens of any ethnicity.
The Arizona law allows police to verify residency status of non-citizens.
The problem I have is how they establish whether someone is a non-citizen. They will wind up asking actual citizens to verify their citizenship status in the course of complying with this law, because if they aren't sure someone is a citizen, they have to ask. Further, while an Arizona driver's license is proof of (at least) legal residency status (at the time the license was issued), the same can't be said for many other states, notably New Mexico. Ironically, legal residents are in a much better position that citizens are to establish to a random cop that they are legally permitted to be here.
So suppose I'm an American Citizen with a valid New Mexico driver's license driving through Arizona. I don't have my birth certificate or passport on me, because I have no reason to believe I should require either of those documents to travel between US states. Suppose further that my tail-light is burnt out, but I don't know about it, and I get pulled over. During the course of this lawful interaction, for whatever reason, the officer suspects that I am an illegal alien, and asks to verify my citizenship status. I show him my New Mexico ID
From here, there are two possibilities. First, he accepts my ID as valid proof of my legal residency, even though it is no such thing. Honestly, I believe that this will happen in most cases like this, even though nothing has been demonstrated to the officer. The other possibility is that the officer correctly recognizes that I don't have valid proof of my citizenship or legal residency, and takes me to the lock-up pending investigation. At best, assuming the officers involved are cooperative and non-hostile, it could take several hours for the county clerk's office/hospital where I was born to get the needed documents so I can be released. I don't want to think about the worst case scenario.
Now suppose that, despite the fact that I am a citizen, my English isn't that great, or I'm mentally challenged and can't really understand what's going on, or I just managed to somehow piss off the cop.
I believe the chance that something like this will happen, more than once, is quite high. Regardless, it's possible under both the new law in Arizona and the existing, unenforced federal law. This makes them both bad laws, in my opinion. I don't deny that illegal immigration is a big problem in need of a solution, but there must be a better way than this.