In practice, that’s not what happens generally. A widget is $100, the 5% tariff brings it up to $105 and company bumps the price to $110. People need the widget so they buy it at $110. Tariff goes away, but company knows that people will pay at least $110 for the widget, so they try bumping the price to $115. Maybe it doesn’t sell, so they “discount” it back to $110 and people will happily buy it thinking they’re getting a deal, while the company is pocketing that extra $10.
In practice, that’s not what happens generally. A widget is $100, the 5% tariff brings it up to $105 and company bumps the price to $110. People need the widget so they buy it at $110. Tariff goes away, but company knows that people will pay at least $110 for the widget, so they try bumping the price to $115. Maybe it doesn’t sell, so they “discount” it back to $110 and people will happily buy it thinking they’re getting a deal, while the company is pocketing that extra $10.