That's a pretty stupid idea. The Smart is a joke, even in Europe. It can barely reach highway speeds, and has a ride quality worse than a schoolbus, making it unsuitable for long trips, which is something that we do in North America.
Fuel is far more expensive in Europe than it is here, and they can make do without all of them driving Smarts. If they improved the quality of diesel fuel, and starting putting efficient diesel engines in more cars, it might ease the problem (but we would still rely on dino bones). Many cars sold here are sold in Europe with diesel, or less powerful engines, for improved economy. It could pretty much be directly implemented here.
We also need not go as far as the Smart. Smaller cars, in sizes like the Neon, or even smaller like a Hyundai Accent / Toyota Echo/ Geo Metro, can be fuel efficient, more practical than a Smart, all without being a total death trap. All that has to be done is fit them with even more fuel efficient engines (like diesels).
In Mexico DC sells two cars that are smaller than the Neon. One is the Dodge Verna, which is a Hyundai Accent. I would say it's rebadged, but all the photos on the website still show H emblems. They also sell the Dodge Atos, which looks similar to an Aveo type car. Those two models are much more marketable than a Smart.
If they did waive safety laws, insurance premiums would kill any benefit.
I would rather take my chances in a shopping cart powered by a Tecumseh engine.
A really technologically simple solution that also works in Europe is manual shift transmissions.