It is somewhat funny how you argue that American engines are quite economical for their size. So you agree that in comparison to small engines they are less fuel efficient? Also just looking at how many European and Japanese cars are sold in the US vs the other way around is pretty telling.
That said I agree that taxing fuel over car taxes would likely be a good thing, however I think there is also the view of taxing car ownership because they take up space in particular in cities.
I don't think you understand how fuel economy works. It's dominated by the size of the thing you have to move and how big of a hole you need to punch in the air to do it.
After you've applied all the tricks to get a big engine minimize fuel consumption as it cruises down the road the fuel economy basically reflects the operator's propensity to use the skinny pedal. Of course, if you have the power you use the power so that does help the small engine. Look at all the small turbo engines they're putting in trucks and vans these days. They don't put down substantially better fuel economy numbers than the bigger NA engines in the same platforms.
Contrast with manufacturers who haven't learned to apply "all the tricks" yet, their big engines still drink fuel like it's 2019. Look at the fuel economy of Toyota's 4-6L v8s and compare to GMs 4-6L v8s in similiar vehicles.
> Also just looking at how many European and Japanese cars are sold in the US vs the other way around is pretty telling.
I hate to piss on your "euope good murka bad" circle jerk but when you go up the org chart you'll find that plenty of stuff that gets sold globally comes from GM and FCA (I'm sorry, Stellantis, lol sounds like a blood pressure drug) and is just badged as appropriate per locale. Both the big guys and the smaller OEMs do their best to sell boring sedans, crossovers, minivans and midsize SUVs globally though specific models from specific brands or configurations (e.g. can't buy a city van with a manual in USA) will get withheld from specific markets due to stiff competition (e.g. hard to sell an Explorer in Germany) or consumer preference (few wagons in USA). Each region also gets some stuff that is specific to it. In Europe they have their tiny commuter cars. 'Murka gets big SUVs and pickups. Australia gets a bunch of big sedans and big sedans that identify as pickups. South America gets the "greatest hits" from whatever the last generation of vehicles was. Equatorial Asia gets all manner of basic cars and SUVs that are made extra-inexpensive for that market.
That said I agree that taxing fuel over car taxes would likely be a good thing, however I think there is also the view of taxing car ownership because they take up space in particular in cities.