Part of Vermont, an American state (7)
I believe the answer is:
montana
'state' is the definition.
(Montana is an example)
'part of vermont an american' is the wordplay.
'part of' indicates a hidden word.
'MONTANA' can be found hidden inside 'vermont an american'.
(Other definitions for montana that I've seen before include "State of NW USA" , "Nato man (anag) - US state" , "North-western state bordering Canada" , "Send manna to this US state" , "American state, capital Helena" .)