What best describes the difference between foreign policy and domestic policy? Domestic policy issues affect areas within U. S. borders, while foreign policy issues affect areas outside U. S. borders. Foreign policy issues affect only Canada and Mexico, while domestic policy issues affect only the United States. Foreign policy issues affect only countries that trade with the United States, while domestic policy issues affect trade between states. Domestic policy issues affect all 50 states, while foreign policy issues affect only a few states.