From the Super Mario Wiki
The Smokescreen is an item found in Mario Kart Arcade GP and Mario Kart Arcade GP 2. If the player uses it, the player will throw this item backwards as the item starts to make smoke around the lane of the course. If a player gets in the smoke that came from the item, the player temporary gets blind. It works similarly to the Blooper from Mario Kart Wii and Mario Kart DS.