Biggest issue: when?
But ok, let's play this. Portugal joins in. I see two possibities:
1st possibility:
-this finally tips Spain into joining axis, or be trapped between the two sides. Spain then, with German assistance, invades and ocupies at least part of Portugal, certainly Lisboa, Porto and the coastal areas (and, in passing, ocupy Gibraltar); I don't think allies could send help in time, unless the Portuguese declaration is prepared waaaay in advance.
-Portuguese government evacuates to the Açores (this plan existed) where it holes up waiting for allied assitance;
-thanks to this, and the spanish colonies in North Africa, axis now has complete power over the entrance of the Med, efectivelly blocking any support of Malta via the Atlantic; it also has access to excelent ports for it's submarines to enter the Atlantic, efectively out of reach of UK-based air attack;
-Portuguese tungsteen now never stops flowing into Germany.
2nd possibility:
-Spain, mindfull of the fact that most if it's oil and grain comes from the US, decides to join the allies as well, trusting that the Pyrenees will hold off German retaliation long enough for the allies to reinforce them. Portugal would probably send infantry and whatever artilery we had to help in this, since it would be in our best interest. Mountains are not exactly tank country, so no Blitzkrieg would happen there;
-this would give the allies a jumping point into France, possibly resulting in no Normandy invasion. Instead, the combined allied army could "roll down the mountains" right into France. But this would depend on how much of the mountain passes Spain could hold on to, before help arrives;
-Germany would take over Vichy France with weeks, to prevent any "funy ideas" from the joint France/Spain border;
-full naval allied access to the Med, supported by air based in Spain and Portugal (both for attack and anti-sub cover), greatly relieving North Africa and Malta, and putting extra preassure on Italy and the french colonies.