United States of America

All eggs in the A.I. basket

Absent any major negative shock, the U.S. economy should continue growing at a healthy rate or even accelerate. Faith in the promise of A.I. is the overwhelming driver of demand; both through continued extraordinary growth in A.I. CAPEX (~2.5-3% of GDP) and the extra consumer spending caused by outsized equity returns (A.I. firms account for 40% of the S&P 500 market cap). The top quintile of households accounts for an estimated 45% of consumer spending. Where the average European household builds wealth by saving 15% of its income, its American counterpart builds wealth through capital gains and consumes 95% of its income. Thus, a disappointment in the monetization calendar of A.I. model providers would result in both a downturn in CAPEX and an equity selloff triggering a contraction in consumption (70% of GDP), as wealthier households save in excess to rebalance their net worth. Fed emergency measures would limit contagion to the wider financial system. This recessionary scenario is the main threat to the outlook but is not our base case. From 2027 onwards, the execution of A.I. investment is also expected to be encumbered by regulatory backlash and supply bottlenecks. Though exports are strongly supported by oil & gas and digital services, this is more than offset by surging imports of capital and intermediate goods related to the A.I. buildout (servers, advanced semiconductors, electrical equipment).

Notwithstanding a healthy economy at the aggregate, the production cost environment has become more challenging for smaller firms further away from the technological frontier. Business insolvencies overall are rising at a 16% YoY rate and stand at 23% above pre-pandemic levels as of Q2 2026. The volatile tariff policy has resulted in persistent uncertainty, higher input cost and more demanding inventory management, despite the welcome tailwind of IEEPA refunds (0.5% of GDP). Inflation has remained stubbornly above target and, though currently on a moderation path, is at risk of being pushed up by supply pressures (geopolitical shocks to energy, food inflation driven by a volatile climate and fertilizer shortages). This backdrop is making it difficult for the Fed to continue cutting rates. With bond markets increasingly scrutinizing U.S. public finances, the sovereign premium is also widening. Financial conditions are thus becoming more onerous. Its most visible consequences are a real-estate market subdued by persistently high mortgage rates (and a recession in residential construction); as well as rising defaults among firms reliant on private credit lenders. Despite being vulnerable to two potential major destabilizing shocks (A.I. disruption and the immigration crackdown), the labor market should remain roughly in balance slightly below full employment (~4%), unless and until we start seeing stronger evidence of A.I.-related layoffs. The Fed is expected to keep rates around in the 3.5-4% range through 2027 but remains highly flexible given the significant changes happening in the economy.

US dollar dominance allows fiscal largesse; external deficits will persist

Were it not for the attractiveness of US government bonds as the world’s benchmark reserve asset, the fiscal trajectory would be cause for imminent concern. Due to a combination of higher interest rates and persistently high primary deficits (3% of GDP), interest expenditure has ballooned from a pre-pandemic average of 1.5% of GDP to 3.1% in 2025 and is expected to rise further as growth normalizes but rates stay high. The largest items of spending (social security, health and defense) will continue to grow amid population ageing, rising medical costs, and the need to renew and maintain military capabilities. The push for improving government cost-efficiency should be comparatively small, with the largest potential targets for spending being politically sensitive (spending on veterans, opioid crisis, housing assistance). The One Big Beautiful Bill Act, which introduces wide-reaching tax cuts while only partially reducing spending (healthcare, food aid and green energy subsidies), should result in a net increase of USD 3-3.7 tn. to the federal debt over the next ten years. We see potential for continued growing pressure on sovereign rates in the medium term.

The country will continue to accumulate large current account deficits for the foreseeable future. First, the good health of the consumer will yield persistent demand for imports, foreign investment should continue flowing into the economy, while the additional deficit spending will create financing requirements. Tariffs could create a reduction of overall imports in the very short run, but trade partner diversification should progressively offset that effect. The US’s external vulnerabilities would only become an issue if the statuses of the dollar as reserve currency and treasuries as haven assets were to significantly erode. Despite some early signs of this in recent years (rising yields, gold bull runs), the USD’s dominance over other fiat currencies remains substantial.

House expected to flip Democrat, trade war to endure

President Donald Trump and the Republican party secured a decisive victory in the November 2024 elections, winning the presidency by a comfortable margin in the electoral college (312/538 votes) and in both houses of Congress (220/435 House seats, 53/100 Senate seats). Given the very slim 5-seat majority, the record number of representatives retiring (43), the high number of competitive districts (42), and the tendency for incumbents to be sanctioned in midterm elections; the House is expected to flip Democrat. Republicans stand better chances of keeping the Senate, but it is also at risk. Majorities in both chambers have been crucial for passing flagship policies, such as extending and expanding the 2017 tax cuts, boosting budget for immigration enforcement, restricting eligibility conditions for Medicaid, and rolling back clean energy and EV tax credits. Most types of legislation also require 60 votes in the Senate, giving Democrats some power to obstruct policy and occasionally leading to government shutdowns. The Supreme Court leans conservative (6-3), and its commitment to act as a check on executive power is being challenged by the White House willing to test boundaries. However, when it came to the visibly unlawful use of IEEPA “reciprocal’ tariffs and the President’s attempts to dismiss Fed governors, the Court protected institutions. We expect the White House to persist in attempts to influence the Fed, and to fail as long as Fed policymakers are protected by the Court.

Given the precedent set by the IEEPA ruling, the White House is focusing on re-establishing its desired overall tariff range (somewhere in the 10-15% range) using more robust legal authorities. Each tariff package is expected to be challenged in court, triggering a multi-month process testing its legal soundness. We expect continued use of tariff threats as a foreign policy negotiation tool to be used to pressure other countries on diverse topics (Greenland, security and migration, drug trade, supporting individuals close to the President, etc…). The relationship with China is a major source of potential instability. There is a deep-rooted strategic competition between both superpowers. Both have used a variety of tools to pressure their rival’s economy (tariffs, currency manipulation, industrial subsidies, export restrictions of critical inputs such as semiconductors and rare earth minerals).

At the time of writing, the relationship is undergoing relative détente, but this state of affairs can be quickly reversed. The US will continue to seek decoupling from China in trade and finance, while accelerating efforts to win the technological race on A.I. As for the EU, the 2025 Turnberry agreement caps tariffs at 15%, though it remains unclear whether the US will uphold it during diplomatic tensions, such as those involving Spain and digital service taxation. Significant uncertainty continues to cloud the future of the USMCA agreement with Mexico and Canada (20% of the US’s total trade, 5% of GDP). The pact will expire in 2036 unless there is an agreement for an extension to 2042; and with it the privileged access to the US market that has allowed for a deeply integrated north American supply chain. Our working assumption remains that some solution will be found that preserves privileged access for Canada and Mexico, but that episodes of tension will flare up intermittently over the short term (including threatened and executed tariffs).

Payment

Exporters should pay close attention to sales contract clauses on the respective obligations of the parties and determine payment terms best suited to the context, particularly where credit payment obligations are involved. In this regard, cheques and bills of exchange are very basic payment devices that do not allow creditors to bring actions for recovery in respect of “exchange law” (droit cambiaire) as is possible in other signatory countries of the 1930 and 1931 Geneva Conventions on uniform legal treatment of bills of exchange and cheques.

Cheques are widely used but, as they are not required to be covered at their issue, offer relatively limited guarantees. Account holders may stop payment on a cheque by submitting a written request to the bank within 14 days of the cheque’s issue. Moreover, in the event of default, payees must still provide proof of claim. Certified checks offer greater security to suppliers, as the bank certifying the cheque thereby confirms the presence of sufficient funds in the account and makes a commitment to pay it. Although more difficult to obtain and therefore less commonplace, cashier’s checks – cheques drawn directly on a bank’s own account – provide complete security as they constitute a direct undertaking to pay from the bank.

Bills of exchange and promissory notes are less commonly used and offer no specific proof of debt. The open account system is only justified after a continuing business relationship has been established.

Transfers are used frequently – especially via the SWIFT electronic network, to which most American banks are connected, and which provides speedy and low-cost processing of international payments. SWIFT transfers are particularly suitable where real trust exists between the contracting parties, since the seller is dependent on the buyer acting in good faith and effectively initiating the transfer order.

For large amounts, major American companies also use two other highly automated interbank transfer systems – the Clearing House Interbank Payments System (CHIPS), operated by private financial institutions, and the Fedwire Funds Service System, operated by the Federal Reserve.

Debt Collection

Amicable phase

Since the American legal system is complex and costly (especially regarding lawyers’ fees), it is advisable to negotiate and settle out of court with customers wherever possible, or otherwise hire a collection agency.

Legal proceedings

The judicial system comprises two basic types of court: the federal District Courts with at least one such court in each state and the Circuit or County Courts under the jurisdiction of each state.

Fast-track proceedings

If the debt is certain and undisputed, US law provides for a “summary judgment” procedure, where a motion for summary judgment is based upon a claim by one party that all necessary factual issues are settled or that no trial is necessary. This is appropriate when the court determines there are no factual issues remaining to be tried, and therefore a cause of action or all causes of action in the complaint can be decided without a trial. If the judge decides that there are facts in dispute, the court will deny the motion for summary judgment and order a trial.

Ordinary proceedings

The vast majority of proceedings are heard by state courts, which apply state and federal law to disputes falling within their jurisdictions (i.e. legal actions concerning persons domiciled or resident in the state).

Federal courts, on the other hand, rule on disputes involving state governments, cases involving interpretations of the constitution or federal treaties, and claims above USD 75,000 between citizens of different American states or between an American citizen and a foreign national or foreign state body or, in some cases, between plaintiffs and defendants from foreign countries.

A key feature of the American judicial system is the pre-trial “discovery” phase, whereby each party may demand evidence and testimonies relating to the dispute from the adversary before the court hears the case. During the trial itself, judges give plaintiffs and their lawyers a considerable leeway to produce pertinent documents at any time and conduct the trial in general. This is an adversarial procedure, where the judge has more the role of an arbitrator, ensuring compliance with the procedural rules, although more and more practices enhances the role of the judge in the running of the case. The discovery phase can last several months, even years. It can entail high costs due to each adversary’s insistence on constantly providing pertinent evidence (argued by each party), and involve various means – such as investigations, requests for supporting documents, witness testimony, and detective reports – which are then submitted for court approval during the final phase of the proceedings.

In civil cases, the jury determines whether the demand is justified and also determines the penalty to impose on the offender. For especially complex, lengthy, or expensive litigations, such as insolvency cases, courts have been known to allow creditors to hold as liable the professionals (e.g. auditors) who have counselled the defaulting party, where such advisors have demonstrably acted improperly.

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Enforcement of a Legal Decision

Domestic judgments in the United States give the creditors additional rights, such as the seizure and selling of the debtor’s assets or the garnishment of their bank account. As a federal state, decisions rendered in one of the country’s states may be executed in another state’s court, provided that the enforcing court considers that it is competent to enforce any judgement.

For foreign awards, each state has its own legislation. Nevertheless, they must be first recognised as domestic judgments. If a reciprocal recognition treaty exists, the requirement is fulfilled. However, in the absence of one, exequatur proceedings aim at ensuring enforcement in domestic court, after verifying the judgment meets certain criteria provided by the state law.

Insolvency Proceedings

OUT-OF COURT PROCEEDINGS

Different state laws can propose out-of court proceedings in order to avoid any formal judicial proceedings, such as the Assignment for the benefit of creditors in the state of California, where a company turns over all of its assets to an independent third party, who liquidates and distributes them to all creditors in an equitable fashion.

RESTRUCTURING PROCEEDINGS

Chapter 11 of the American Bankruptcy Code provides a distressed entity with the opportunity to preserve its business as a going concern while implementing an operation of financial restructuring. The debtor can seek to adjust its debt by reduction the amount owed or extending repayment terms. The debtor entity and its management continue to operate the business as the debtor-in-possession. The Bankruptcy Court supervises the proceedings.

LIQUIDATION

According to Chapter 7 of the American Bankruptcy Code, the purpose of these proceedings is to implement an orderly liquidation of the distressed entity. The court-supervised process involves a trustee selling assets and distributing the proceeds to creditors in accordance with the statutory priorities provided in the Bankruptcy Code as well as pursuing available causes of action. The US Trustee appoints an independent interim trustee to administer the case. The interim trustee holds a meeting of creditors after the petition is filed. He is responsible for liquidating the estate’s assets and distributing the proceeds to the creditors. The court supervises the proceedings. State law can also provide different mechanism for liquidation of a debtor’s assets such as receivership.

Last updated : August 2026