US 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 United States.

"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 US election, where Trump is in a dead heat with Vice President Kamala Harris, according to polls.

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

During the hour-long interview, Trump pushed back at arguments 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.