A packed public hearing at the US Trade Representative's (USTR) office followed a June recommendation by the quasi-judicial US International Trade Commission for tariffs of up to 55 percent on Chinese passenger and light truck tires.

The commission made the decision based on a petition led by the United Steelworkers Union that Chinese tire imports had tripled since 2004, forcing plant shutdowns and the loss of 5,100 jobs.

"Our workers cannot compete when the market is is being overwhelmed by a massive flood of tires from China," Leo Gerard, president of the United Steelworkers Union, argued at the one-day hearing.

"In short, this industry is in a turning point and relief will determine this industry's future."

Citing Obama's promise to assess each trade case on its merits, Gerard said the government should demonstrate to American workers and families "on the frontlines when an import surge hits that they won't be treated like mere cannon fodder."

But the largest Chinese tire manufacturer warned in a statement Friday that the Obama administration would be violating its own stand against protectionism if it accepted the tariff proposal.

"Accepting the commission's proposed remedy would put the administration at odds with its public statements about refraining from taking protectionist measures in response to the global economic meltdown," said Vic DeIorio, executive vice president of GITI Tire (US), a Singapore-based company which is the largest manufacturer of tires in China.

"It is important to remember that in this case, there are no allegations of unfair trade practices, nor are there allegations that anyone has violated US trade law," he said.

The American Coalition for Free Trade in Tires, which represents the tire distribution and retail sectors, argued that 25,000 American jobs, mostly in the tire distribution and retail sectors, would be lost if the duties were imposed on the Chinese tires.

"For every job 'saved' by this protection, up to 25 jobs will be lost," said Dennis King, chairman of the coalition. "This is due to the fact that the tariffs recommended by the ITC will cost US consumers an additional 600 to 700 million dollars per year for tires."

The International Trade Commission, an independent, quasi-judicial federal agency with broad investigative responsibilities on trade matters, decided on June 18 that rising Chinese tire imports were disrupting the US market.

The commission has submitted its investigation report to Obama and US Trade Representative Ron Kirk last month. Friday's hearing was the final event in the investigation before Obama makes a ruling.

Kirk's office said Friday it would work with other government agencies "to determine whether a remedy is appropriate, and if so, what kind of remedy be recommended."

It will submit its recommendation to Obama by September 2. Obama is required to make a decision within 15 days after receiving it -- just ahead of hosting Chinese President Hu Jintao at a Group of 20 leaders' meeting in Pittsburgh.

If Obama rejects the tariff proposal, he will disappoint unions, which are a key support base, and some leaders in his Democratic Party. And if he embraces the plan, he will anger China with one of the first major trade disputes between the two powers in the Obama presidency.

Beijing could also retaliate against US exports at a time when the world's largest economy is reeling from prolonged recession.

earlier related report
US banks still in tight straits despite profits, bonuses
US banks, at the center of the global economic crisis, reported robust earnings for the second quarter of 2009 even though many -- especially smaller banks -- remain in tight straits, experts say.

In the flood of financial results for the April-June period there was a clear breakwater between the nation's large financial institutions, sheltered by the demise of rivals like Lehman Brothers in the financial storm, and regional banks, many of which are still bleeding red.

The four behemoths that emerged from the US financial system meltdown have raised enormous profits: 2.7 billion dollars for JPMorgan Chase, 3.2 billion for Bank of America and Wells Fargo, and even 4.3 billion for the worst-hit of the lot, Citigroup.

"These results come from the investment bank" side and not from commercial lending, which is crucial for economic activity, said Cesare de Novellis, an analyst at Meeschaert New York.

These profits came on the back of a powerful rally in equity markets and a renewed vigor in bond markets, he said.

Investment bank Goldman Sachs, whose general public activities are limited, saw quarterly profit jump 65 percent from a year ago, to 3.4 billion dollars.

The strong results have revived the debate over bonuses paid to traders, which seem to be heading for the stratosphere after laying low in recent months.

Citigroup, which was bailed out by the federal government with 45 billion taxpayer dollars, and Merrill Lynch, which agreed to a government-secured takeover by Bank of America to escape bankruptcy, found the means to pay bonuses last year of 5.33 billion and 3.6 billion dollars, respectively, according to a recent report by the New York state attorney general's office.

The managing director of the International Monetary Fund, Dominique Strauss-Kahn, said he was "appalled" by the return of the big bonus culture that had promoted the risk taking responsible in part for the financial system crisis.

After a star Citigroup trader pressed the bank to pay him a 100-million-dollar bonus this year, the US House of Representatives passed a measure capping executive compensation at the large companies rescued by the government.

"President Barack Obama's administration pushed the idea of reforming the financial system, but for the moment it only has succeeded in mopping up the losses of big banks," De Novellis said.

The banks that have fattened their bonuses the most "already had reimbursed the public funds, so the government can no longer pressure them to limit" the payouts to their hot-shot traders.

The current euphoria may prove fleeting because the big banks are facing a tsunami of bad debts, which is already swamping their regional rivals. Those smaller banks, like KeyCorp and SunTrust, piled up losses in the second quarter.

"The regional banks, including small ones, have less diversified portfolios than the larger banks and tend to be more vulnerable to the local or regional economy," said Charles Geisst, professor of finance at Manhattan College.

The regional banks have experienced an explosion of defaults, especially in the states hard-hit by the worst US recession since the Great Depression and the credit crisis, such as California and Georgia.

To date this year, US authorities have closed 72 banks, compared with 25 in all of 2008.

Geisst warned against two new ticking time-bombs for the big banks: large amounts of credit card exposure and commercial real estate loans.

"They cannot continue to thrive on investment banking for much longer," he said.

In their latest report on the sector, Standard & Poor's analysts said that "pressures of the credit cycle persist and are moving into commercial areas."

Amid an economy struggling to emerge from a painful recession that began in December 2007, they cautioned that "credit losses could keep rising for another several quarters," forcing banks to take tens of billions of dollars in charges.

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