American Express (AXP): A Strategic Anchor in a Shifting Global Economy

In an era marked by geopolitical uncertainty and economic recalibration, investors are increasingly seeking assets that balance resilience with growth potential. American Express (AXP) stands out as a compelling case study in this context. With a year-to-date (YTD) return of 25.71%, robust revenue growth, and a defensible business model, AXP has demonstrated its ability to thrive even as the U.S. navigates a Trump-driven trade regime characterized by tariffs, retaliatory measures, and shifting global commerce dynamics. This article examines why AXP is not just a defensive play but a strategic holding for investors navigating a risk-on market turning uncertain.

Value Resilience in a Volatile Landscape

American Express's financial performance in Q2 2025 underscores its operational strength. The company reported record revenue of $17.9 billion, a 9% year-over-year increase, driven by a 20% surge in net card fees and 7% growth in total card member spending. Earnings per share (EPS) rose 17% to $4.08, excluding the prior year's Accertify gain, while return on equity (ROE) hit 36%, a testament to its capital efficiency. These metrics highlight AXP's ability to generate consistent cash flow, even as macroeconomic headwinds—such as Trump's 2025 tariffs—introduce volatility into global markets.

The company's closed-loop network model, which captures more value per transaction than open-loop competitors like Visa and Mastercard, provides a structural advantage. This model, combined with a focus on premium customers—whose spending habits remain resilient despite inflation and trade-related disruptions—positions AXP to maintain pricing power. For instance, international spending grew 10% in Q1 2025, outpacing broader market trends, as high-net-worth individuals and premium travelers continued to prioritize luxury and travel services.

Long-Term Earnings Momentum and Strategic Adaptability

AXP's long-term earnings momentum is underpinned by its proactive approach to innovation and market expansion. The company has launched over 30 product refreshes, including updates to its Platinum Card and loyalty programs, which are designed to enhance customer retention and drive fee-based revenue. CEO Stephen Squeri has emphasized that these initiatives are not short-term fixes but long-term investments, with the costs of the Platinum Card refresh expected to be offset by benefits over two years.

Strategic acquisitions, such as Center (an expense management company), further diversify AXP's revenue streams. By integrating Center's technology into its small business and corporate card offerings, AXP is tapping into a segment that has shown resilience during economic downturns. Small businesses, which Squeri calls a “long-term bet,” are less sensitive to macroeconomic fluctuations and provide a stable base for growth. This diversification is critical as the U.S. card payments market slows to 2.4% growth in 2025, compared to 5% in 2024.

Navigating the Trump Trade Regime: Cross-Border Resilience

The Trump administration's 2025 tariffs—averaging 19.5% on imports—have introduced friction into global trade, yet AXP has adapted rather than retreated. The company's cross-border transaction volumes remain strong, supported by partnerships like its collaboration with Alipay. This integration allows AXP cardholders to link their cards to Alipay's digital wallet, enabling seamless RMB transactions in China. Such partnerships mitigate the risks of currency volatility and regulatory barriers, ensuring AXP's relevance in a fragmented global payments landscape.

Moreover, AXP's pursuit of Apple Card's payment processing from Mastercard signals its intent to dominate the digital payments space. By becoming both the issuing bank and network processor, AXP can leverage its fee-based model to capture a larger share of the growing contactless payment market. These moves are particularly significant as the U.S. government weighs restrictions on Chinese payment platforms like Alipay and WeChat. AXP's proactive integration with Alipay positions it as a bridge between international consumers and Chinese merchants, insulating it from some of the volatility in the trade environment.

Defensive Characteristics in a Risk-On Market

AXP's defensive traits make it an attractive holding in a market where uncertainty is rising. Its high ROE, tight underwriting standards, and fee-based revenue model provide a buffer against economic downturns. For example, the company's provision expense of $1.4 billion in Q2 2025 included a $222 million reserve build due to a worsened macroeconomic outlook, yet AXP maintained its full-year guidance of 8%–10% revenue growth and EPS of $15–$15.50. This confidence stems from its ability to adjust expenses without compromising long-term value, as CEO Squeri noted: “We're not going to stop the refresh strategy.”

AXP's commitment to shareholder returns further enhances its appeal. The company returned $2 billion to shareholders in Q2 2025 through dividends and share repurchases, reflecting its disciplined capital allocation. With a payout ratio of just 25% of earnings, AXP has ample room to increase dividends or repurchase shares, even in a recessionary scenario.

Investment Implications and Strategic Positioning

For investors, AXP represents a rare combination of defensive qualities and growth potential. Its YTD return of 25.71% outperforms the broader market, and its financial metrics suggest continued resilience. However, the company is not without risks. A deepening trade war or a prolonged recession could pressure cross-border transaction volumes, and the cost of product refreshes may weigh on short-term margins. That said, AXP's long-term strategy—rooted in innovation, diversification, and premium customer retention—positions it to outperform in both stable and volatile environments.

Conclusion

In a world where geopolitical tensions and economic shifts dominate headlines, American Express offers a blueprint for strategic resilience. Its ability to adapt to a Trump-driven trade regime, coupled with its focus on premium customers, small business growth, and digital innovation, makes it a compelling holding for investors seeking both stability and upside. As the global economy continues to recalibrate, AXP's disciplined approach to capital allocation and its unique position in the payments ecosystem will likely ensure its place as a cornerstone of a well-diversified portfolio.