>Surely car manufacturers didn't have a say, which is why US and EU emission standards look like this

As per the source of the image says, "On the other hand, American regulators are focused on smog and health impacts of air pollution." Which the graphic you provided well indicates.

Look, California was probably the first governmental entity to regulate tailpipe emissions. Such so that it's written in the Clean Air Act by name to run its own regulatory scheme to enact stricter regulation(with federal waivers, but that's another issue). The reason being, that LA's unique geography makes smog worse. Heck, in the 1940s, they had an episode severe enough they thought they were under chemical attack by the Japanese. As such, CARB's emission standards were focused on reducing the more directly harmful pollutants like hydrocarbons, ozone, NOx & PM. So, given California's influence on the original 1970 Clean Air Act and the 1988 California Clean Air Act's influence on the subsequent amendment in 1990, I don't see how that graphic would support your argument. I mean, had they such hypothetical power, they could have also blocked the banning of leaded gasoline that was in the same amendment.

>Well duh, let's keep diesel cars to petrol standards so that their benefits don't matter and their disadvantages are prohibitive!

Emissions vs fuel economy. You're being facetious, but if that argument was true, why bother importing diesel passenger vehicles into the states? They didn't even start reintroducing diesels in America until they thought they could harmonize emissions from Euro 5 with Tier II Bin 5.