How will President-elect Obama affect your portfolio? Keep reading our special series for the lowdown.

I'm a strong believer in the benefits of globalization, so I jumped at the opportunity to review President-elect Obama's platform on trade. As economies become increasingly intertwined and U.S. companies increasingly seek out growth beyond our national borders, this is a key topic for investors. Let's review Obama's main platform points as stated on his campaign website, along with my summaries on each.

Fight for free trade; amend NAFTA
I think the drive to open up foreign markets will slow down. Obama opposes CAFTA, for one thing, and my guess is that Obama's campaign promise to rewrite NAFTA is mostly political grandstanding. I'd be surprised if his administration took any significant steps in this direction.

Instead, I agree with analysis from Morgan Stanley that the emphasis in this area will be on buttressing the enforcement of existing agreements, by taking actions such as bringing more cases in front of the World Trade Organization.

Although this is an area where the president and lawmakers have the potential to do grave harm, the good news is that there are now more pressing topics on the agenda than free-trade agreements. So I don't expect any sweeping change on this front. Furthermore, Obama tempered his trade stance over the course of the election campaign.

End tax breaks for companies that send jobs overseas
I can agree with the first part of this measure, but why not eliminate all tax breaks and lower the overall corporate tax rate instead? This platform point is probably based on the notion that outsourcing has had a substantially negative net impact on U.S. employment -- but it's a notion that a mountain of data contradicts.

The selective nature of this plank could disproportionately penalize certain companies, including two industries that are highly active in outsourcing:

  • Financial services, including giants JPMorgan Chase (NYSE:JPM), the GE Capital unit of General Electric (NYSE:GE), and American Express (NYSE:AXP).
  • Information technology, including IBM (NYSE:IBM) and Hewlett-Packard (NYSE:HPQ).

Reward companies that support American workers
Many American companies are headquartered outside the U.S. for tax purposes, including Tyco International (NYSE:TYC), Garmin (NASDAQ:GRMN), and Marvell Technology. That's something Obama frowns on.

The Patriot Employer Act of 2007, which was introduced by Obama and Sens. Dick Durbin, D-Ill., and Sherrod Brown, D-Ohio, does not provide for penalties for such companies, but it does make them ineligible for a tax credit equal to 1% of taxable income, which could give their "patriot employer" competitors a boost in profit and cash-flow margins. That gain would put pressure on the valuations of outsourcing companies.

Whether or not this legislation passes, expect the political and regulatory environment to become noticeably chillier for these companies.

A passing grade, with reservations

Obama's protectionist stance concerns me, but I think his actions in this sphere will be overshadowed by his handling of the current financial crisis. I recommend that investors spend more time evaluating him on that front.

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Alex Dumortier, CFA, has no beneficial interest in any of the companies mentioned in this article. Garmin is a Motley Fool Global Gains selection and a Motley Fool Stock Advisor pick. JPMorgan Chase is a Motley Fool Income Investor pick. Tyco International and American Express are Motley Fool Inside Value selections. The Fool owns shares of American Express. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.