Elizabeth dresses American in outfit (8)
I believe the answer is:
business
'outfit' is the definition.
(I've seen this before)
'elizabeth dresses american in' is the wordplay.
'elizabeth' becomes 'Bess'.
'dresses' is an insertion indicator (dress can mean cover).
'american' becomes 'us' (abbreviation for United States).
'us'+'in'='usin'
'bess' enclosing 'usin' is 'BUSINESS'.
(Other definitions for business that I've seen before include "Firm" , "Affair - matters to be attended to" , "See 1" , "outfit" , "Company U occupation" .)