If I make a widget, and I know I can get people to pay $400 for it, I don't go "Well, it costs me 100 to make, so 150+tax = 180 is what I'll charge". I say "It costs 100 to make, people will pay 400, so my profit is 400-(tax+100). That's how I make the most profit. If tax goes up, people will still only pay 400 for it, so my profits may go down. If they go up high enough, it may make sense for me to charge more and sell fewer widgets, but the base price is set by what I know I can sell the item for.
No no no no no no. If it costs you 100 to make a widget then, at most, it costs your competitor 150 to make. In modern hardware a 1.5x comparative cost advantage is absolutely enormous actually -- real advantages are a few percentage points here and there.
So we'll be generous and assume you've got a huge head start on tooling, process -- you've got the whole supply chain set up and the QA working and everything. That buys you maybe 6 months, maybe a year, in which you can charge $400 (or whatever the market will bear) before your competitor undercuts at $200. You enjoy the good times immensely, you're making 400% margin, everything is peachy. But eventually it ends and you have to match the competitor's pricing or move on to the next thing.