This paper studies how one country’s decision to liberalize trade affects the political economic structure that determines environmental policy in another country. By constructing a political economy model in which the formation of lobby groups and environmental policy are endogenously determined, we show that unilateral tariff reductions by a large country importing a polluting good will generate a lobby group with a relatively lower cost of organization in a small country exporting that good. A formulated lobby demands an inefficient environmental policy, and hence, the small country’s environmental regulations become less efficient. Then, we show that when a lobby already exists, unilateral tariff reductions result in the formation of a rival lobby and consequently make the small country’s environmental policy more efficient.