[throwaway7894]

In your example, why would the domestic seller keep their price at $5 if the other option costs $15?

They'll just raise the price of the domestic good to $13 and we will all pay $8 extra on a thing that used to cost $5.

If the price displayed is still $5 but tariffs added at the end, the domestic seller's $13 sticker price will not look attractive to buyers.

[ethbr1]

To capture market share.

For goods that have alternatives, businesses may choose to under-price (relative to their tariffed competitors) in order to gain sales and customers.

[throwaway7894]

Right, but they'll underprice just below the floor price for the imported good, because why would businesses leave money on the table?

The choice for consumers won't be "choose between a $5 item and $15 item" it will be "choose between $13 and $15", like I mentioned above.

This doesn't work as easily if the sticker price for the imported good is $5 and the real price displayed at the end of the purchasing funnel. The local business will have to keep its sticker price at $5 to avoid losing customers when they initially compare goods or rely on customers to come back to them once they get faced with the tariff tax, which will also lose customers.