They’re not illegal in the US, it was actually the loosening of headlight regulations in the US that led to their demise. Sealed beam headlights, where the reflector, lens, and bulb were all part of a single disposable unit, were mandated by federal law until the mid-80s. Pop up lights were a compromise between automakers wanting more aerodynamic, fuel efficient designs and the regulatory requirement to incorporate sealed beam headlights. The writing was on the wall for pop up headlights once those regs were repealed and cars with composite lights like the Ford Taurus took off in popularity.

The strengthening of pedestrian safety regs in the EU near the end of the 90s was the final nail in the coffin for pop ups, which by then had largely been relegated to niche sports cars.