Rich Still Swiping: Amex Defies Tariffs, Crushes Wall Street Forecasts

American Express (AXP) just delivered a masterclass in how to thrive in turbulent times. Despite headwinds from rising tariffs and a slowing economy, the financial services giant handily beat earnings expectations in Q1 2025, with its affluent customer base acting as a shield against macroeconomic volatility. The company’s focus on premium products, strategic fee hikes, and a creditworthy portfolio of younger and older customers alike is proving to be a winning formula—even as small businesses face tariff-induced struggles.

The Tariff Threat—and Why It’s Not Sinking Amex

Tariffs have become a recurring theme in corporate earnings calls, with many companies citing rising costs and margin pressure. But Amex CEO Steve Squeri made a key distinction: small businesses, not affluent customers, are the ones most at risk. He noted that SMEs in sectors with thin margins could struggle to absorb tariff-driven cost increases, potentially even going out of business. However, Squeri emphasized that Amex’s small business portfolio is skewed toward higher-income, creditworthy clients—a far cry from the “weaker” SMEs that might falter.

This focus on quality over quantity has insulated Amex’s core. While tariffs may pressure certain sectors, the company’s financial health remains tied to affluent consumers, who are spending freely.

The Affluent Are Still Swiping—and Spending More

The real star of Amex’s Q1 report is its premium customer base. Affluent U.S. consumers drove an 8% year-over-year spending increase, with no signs of pulling back despite stock market volatility or rising unemployment. Travel bookings hit records, including strong international activity—a key driver for Amex’s high-margin travel and luxury spend.

This resilience isn’t accidental. Amex is aggressively courting younger demographics while keeping its premium roots intact:
- 3.4 million new cards were issued in Q1, with 60% of new consumer accounts globally coming from millennials and Gen Z.
- Average card fees per new account have risen 40% over three years, as Amex pushes pricier products like its pay-over-time installments and co-brand cards (think Delta SkyMiles or Starbucks Rewards).

The result? Card fees jumped 20% year-over-year, fueled by demand for these premium offerings. Even better: these younger, higher-credit-score customers are performing exceptionally well. Delinquency rates for tenure ≤24 months cardmembers are 30% lower than 2019 levels, a sign that Amex’s underwriting is spot-on.

The Financials: A Strong Foundation

Amex isn’t just talking about trends—it’s translating them into cold, hard cash. The company maintained its 8-10% full-year revenue growth guidance, with earnings per share (EPS) expected between $15–$15.50. This confidence comes from its spend-and-fee-driven model, which accounts for 75% of revenue and is less exposed to cyclical lending risks.

Even as Wall Street frets over a potential recession, Amex’s capital allocation remains aggressive. A $1.3 billion capital return program (dividends and buybacks) includes a 17% dividend hike, underscoring CFO Christophe Lakaye’s conviction in the company’s balance sheet.

Risks Still Lurk, But Amex’s Playbook Mitigates Them

No company is immune to macro risks. Rising unemployment (projected to peak at 5.7%) or a sharp drop in travel could test Amex’s premium strategy. Competitors are also upping their game: rival co-brand cards are hiking fees, though Amex argues its value-added services (travel concierge, exclusive offers) justify its pricing.

Yet Amex’s diversified revenue stream and focus on low-risk, high-income customers give it a buffer. Even if tariffs or a slowdown hit SMEs, the company’s affluent core is too strong to buckle.

Conclusion: Amex’s Affluent Play Is Paying Off—For Now

American Express has turned its premium strategy into a moat. With affluent customers spending 8% more year-over-year, younger cohorts driving fee growth, and a disciplined underwriting process keeping delinquencies low, the company is outperforming expectations in a tough environment.

The data speaks for itself:
- 20% rise in fees (driven by premium products)
- 6% total card member spending growth
- 8-10% revenue guidance maintained despite macro risks

Investors should note that Amex’s success hinges on affluent consumers staying resilient. If the economy tips into recession and luxury spending slows, Amex could face headwinds. But for now, the company’s focus on quality customers and fee-based growth is a blueprint for outperforming in 2025—and beyond.