NEW YORK (CNN/Money) - The election year has begun, and politicians are about as apt to espouse the benefits of free trade as they are to rally against apple pie.

If you've tuned into any of the debates among the Democratic candidates for President, you may have marked the way the candidates are falling all over themselves to be more protectionist than thou.

If you tuned into last Sunday's debate in Iowa, you were treated to (among other things) Howard Dean saying that the North American Free Trade Agreement only globalized the rights of multinational corporations, not workers, and John Edwards complaining that he wasn't for liberalized trade the way Dick Gephardt said he was.

The Bush Administration appears to be for free trade sort of like it's for a strong dollar. It abandoned the steel tariffs it imposed back in March 2002 only last month, after the World Trade Organization said other countries could take retaliatory measures. It slapped quotas on textile imports from China.

"Trade is a nice, battering ram topic in an election year," said Prudential Securities political analyst Charles Gabriel.

One that could heat up, with consequences for investors, as we move closer to election day.

Although the economy is improving, the job market is still soft and unemployment is forecast to have declined only slightly by year end -- making complaints about how highly-skilled U.S. jobs are being "exported" overseas, and U.S. workers are forced into lower paying service jobs, a potent issue. Indeed, a word for this phenomenon -- Walmartization -- is working its way into America's political vocabulary.

By and large, Wall Streeters don't like this sort of stuff -- all the books they read in business school told them that free markets efficiently allocate capital, making the global economy hum. And also because they draw their lifeblood from markets, the ideal of free markets naturally appeals to them.

Furthermore, many sectors of the market are clear losers when it comes to protectionism. Front and center are retailers. Take Wal-Mart, which directly accounts for one-tenth of U.S. imports from China. Slap tariffs on Chinese goods, and Wal-Mart's profits get squeezed.

Sectors like homebuilding and autos get hurt because companies have less access to low-cost building materials. Financial companies lose out, too, because cross-border transactions slow down.

Other companies get hurt not so much by protectionism as by trade liberalization being put off to another day, points out Lehman Brothers chief U.S. economist Ethan Harris.

Think of entertainment, an industry where the U. S. is a juggernaut -- but gets hurt badly by toothless intellectual property laws in many countries. If you could get everybody to agree on stricter standards, then entertainment would benefit hugely. But that agreement doesn't happen when you're busy throwing up trade barriers.

But although protectionism may not be good for investors generally, it can be good for investors in protected industries. At least some of last year's big rally in steel stocks -- U.S. Steel jumped 167 percent -- probably had something to do with the tariffs.

If the U.S. gets tougher on trade, other hard-hit domestic companies could get a boost. Think of outfits like Stanley Works and Black & Decker, which have suffered mightily at the hands of foreign competition.

Finally, many tech companies could do well. As rising protectionism dug into the margins of companies that rely on foreign-made goods, they would look for other ways to lower costs. One of the best ways to do that is to up productivity by investing in new technology.

Still, although protectionist bluster may affect the market in the short run, most observers believe it will eventually come to nought. It may play well with the voters, but forcing back the tide of globalization is ultimately a nonstarter.

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The integration of new players like China into the world economy, like the integration of Japan following World War II, will ultimately be a good thing, says Aeltus Investment Management strategist Jim Griffin. China will end up with a bigger portion of the pie than it has now, but this is not a zero sum game -- the whole pie is going to be bigger.

Conversely, not taking part in the further integration of the global economy would leave a country in the sort of straits the former Soviet republics eventually found themselves in -- on the outside, looking in.