We all know about the foreign transaction fees on US based credit cards, however I have found that in many non-US purchases, the credit card machines (or sales people) offer me the option to pay in US$ or local currency.

If I choose US$, does that still count as a foreign transaction?

On one hand this seems like an obvious question, however at the same time, I am just not sure of the answer.

[Note: any conversion fees charged by the local credit card agent would probably outweigh the credit card fee, thus making this a bit of a moot point, however in some circumstances with high category rewards, it could still work out]