Chicago, Illinois - Republican candidate Donald Trump on Tuesday said that companies will drop plans to build factories overseas when faced with the threat of high tariffs on shipping goods to the US.

"The higher the tariff, the more likely it is that the company will come into the United States," the former president Trump told an audience at the Economic Club of Chicago.

"You make it so high, so horrible, so obnoxious" companies will "come right away," he added.

The economy has emerged as one of the main issues ahead of the November 5 election, where Trump is in a dead heat with Vice President Kamala Harris, according to polls.

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The former president has vowed a 10% to 20% across-the-board tariff on imports and a 60% rate on Chinese goods – and more recently threatened a 200% levy on automobiles made in Mexico.

During the hour-long interview, Trump pushed back at arguments from economic experts that tariffs would hike costs for consumers and punish businesses faced with higher-priced imports.

"To me, the most beautiful word in the dictionary is tariff," Trump said.

It is Americans who pay the tariffs on US imports – not the foreign exporters – and economists estimate that the various versions of Trump's plan would cost US households between $2,000 and $6,000 extra a year.