Fiscal policy refers to the policy tools by which the government adjusts taxation and public spending to influence macroeconomic operations. In foreign trade, fiscal policy mainly affects import and export costs, corporate tax burdens, exchange rates, and aggregate demand. For example, export tax rebates, tariff reductions or exemptions, and fiscal subsidies all fall within the scope of fiscal policy. Use cases include: the government raising the tax rebate rate to stimulate exports, or imposing additional tariffs to curb imports; it can also reduce the costs of foreign trade enterprises through tax cuts. Notes: Fiscal policy differs from monetary policy—the former is implemented by the Ministry of Finance, while the latter is implemented by the central bank; changes in fiscal policy may trigger countermeasures from trading partners, such as anti-subsidy investigations. Difference from 'trade policy': trade policy focuses more on import and export controls, while fiscal policy focuses on revenue and expenditure adjustment. Foreign trade practitioners need to monitor changes in target countries' fiscal policies to avoid risks and seize business opportunities.
📝 Examples
1. To cope with the decline in exports, the country's government implemented an expansionary fiscal policy, raising the export tax rebate rate for some products from 13% to 16%, and our company's profit margin on textiles thus expanded by 3 percentage points. (Note: Adjusting export tax rebates is a typical fiscal policy that directly affects corporate profits.)
2. Because the importing country's new fiscal policy imposed a 5% consumption tax on electronic products, the local retail price of our exported smartwatches rose, and order volume fell by 12% month-on-month. (Note: Tax increases are a contractionary fiscal policy that suppresses import demand.)
💡 Foreign Trade Tips
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