Oh it certainly can but not from the integrated packaged units describe in this thread which are usually designed down to a budget and suffer from compromises along the way.
When I converted my tapes I had my trusty old Nakamichi deck professionally serviced first. I ran the output through my Edirol UA-1EX USB soundcard bought originally for my LP conversions. I listen to the results on my high-end hi-fi electrostatic speakers (QUAD ELS-57) and I can assure you the result is definitely hi-fi (at least to my ageing ears …) subject to the limitations of the physics of tape recording onto narrow tape at relatively low speeds.
The Edirol that I use is no longer manufactured (though some do still seem to be available). The sticky thread that I pointed to earlier gives examples/reviews of soundcards tha we know work well with Audacity. Sound Card Reviews
BTW it’s not the USB data transfer services that are the limiting factor with the packaged USB devices (or an onboard soundcard come to that) - rather it is the quality of the ADC (Analog to Digital Converter) chip used. The ones in the better external soundcards are usually better ADCs than those used in the packaged devices or on-board soundcards tha are delivered with the computer. The other problem with an onboard soundcard is that the inside of a computer, particularly a lapto, can be an electrically noisy envirionment - you can ameliorate this by using a sensibly postioned external card.
WC