Capital mobility is a central determinant of trade policy. Increasing capital mobility creates pressures for trade liberalization, which in itself represents a further increase in capital mobility. Not only does increasing capital mobility orient firm preferences to reducing barriers to trade and strengthen firms relative to other actors in society, it raises the costs to governments of protection, in terms of employment, consumer prices, production and balance of payments effects. Governments can accept these costs, which is why trade liberalization is not automatic, but it is likely that governments will eventually liberalize, as did Canada in the case examined here. This article thus seeks to extend recent work on the trade preferences of multinational corporations by demonstrating the independent yet complementary effects of capital mobility on firm and government preferences.