American Express's Affluent Customers Defy Tariff Fears: A Resilient Growth Engine

American Express (AXP) has long been synonymous with premium financial services catering to affluent customers, and its Q1 2025 results underscore the staying power of this strategy. Despite macroeconomic headwinds and trade policy uncertainties, the company’s wealthy cardholders have maintained robust spending patterns, driving record revenues and reinforcing the value of its premium customer base. This article explores how American Express is weathering tariff concerns while capitalizing on the resilience of high-income spenders.

Ask Aime: How does American Express' Q1 2025 performance reflect the spending patterns of its affluent customer base amidst macroeconomic challenges?

The Financial Proof: A Premium-Driven Surge

American Express reported a 7% year-over-year revenue increase to $17.0 billion in Q1 2025, with cardmember spending rising 6% (or 7% excluding leap year effects). This growth was fueled by consistent monthly spending trends and a 22% surge in international transactions among Gen Z and Millennial cardholders, even as broader markets faced volatility. The company’s net write-off rate remained stable at 2.1%, reflecting the financial discipline of its affluent clientele, who boast higher average FICO scores and lower delinquency rates than industry averages.

Ask Aime: "Why did American Express' (AXP) Q1 2025 revenue increase by 7%?"

While trade tensions and tariff threats briefly pressured AXP’s stock—dropping 8% following April 2025 tariff announcements—the company’s long-term fundamentals remain strong. Its focus on fee-based revenue (e.g., premium card annual fees) and high-margin services insulates it from short-term consumer sentiment shifts.

Tariffs Take a Backseat to Affluent Resilience

Contrary to fears that tariffs might crimp luxury spending, American Express’s data reveals no material impact from trade policies on its core customer segment. Executives emphasized that pent-up demand for travel—a key revenue driver—reached an all-time high, with affluent clients prioritizing experiences over goods. Even in sectors like luxury retail, Gen Z and Millennial spenders (though smaller in scale) grew 22% year-over-year in international markets, signaling a shift toward convenience-driven, perks-centric spending rather than price-sensitive behavior.

The company’s CFO, Christophe Le Caillec, noted that 70% of new accounts in Q1 were opened on fee-paying premium products, highlighting the allure of Amex’s tailored benefits for upwardly mobile, financially secure clients. This contrasts sharply with mass-market banks facing margin pressure from credit-sensitive borrowers.

Navigating Uncertainty: Strategy and Outlook

American Express is doubling down on its premium strategy, even as it acknowledges macroeconomic risks. Its full-year guidance of 8–10% revenue growth and $15.00–$15.50 EPS reflects confidence in affluent customers’ ability to sustain spending through cycles. The company’s diversified revenue streams—net interest income, card fees, and travel services—reduce reliance on any single sector, while its concierge and tariff-mitigation tools (e.g., real-time tariff calculators for corporate clients) add incremental value.

Notably, corporate and small-business clients—key drivers of cross-border transactions—showed incremental growth in wholesale spending, as merchants pre-purchased inventory ahead of potential tariff hikes. While this activity introduced short-term volatility, it underscores the adaptability of Amex’s ecosystem to evolving trade dynamics.

Conclusion: A Fortress in Turbulent Markets

American Express’s Q1 2025 results paint a clear picture: its wealthy cardholders are a resilient growth engine, shielded from tariff-related anxieties by their financial stability and preference for premium experiences. With 7% revenue growth, a 2.1% net write-off rate, and a customer base 20% more affluent than in 2019, Amex is positioned to outperform peers in volatile markets.

The data confirms that affluent customers—spending freely on travel, luxury services, and fee-based perks—are the company’s anchor. Even in scenarios of rising unemployment (projected peak: 5.7%), Amex’s focus on high-margin, high-loyalty segments ensures it can navigate macroeconomic storms. Investors seeking exposure to a consumer discretionary leader with structural advantages should take note: American Express isn’t just weathering tariffs—it’s thriving in their shadow.