Perhaps you missed the dynamics. First the income tax is removed for the domestics, then a tax on the product is added for everyone. That makes the cost basis for the products either the same or much closer to equal. now the imports can't undercut the domestics into bankruptcy.
If I make a widget for $10 and the domestic can't make it for less than $13 then I can sell it for $12.50 and watch him starve to death trying to compete while I thrive. If it costs both of us $13 then we have the basis for real free trade.
What you are talking about is a "Value Added Tax." In every country that ever instituted a VAT income taxes were never repealed.