The NFTaaS market is primed to explode. US tariffs loom large over this exciting prospect. FakeBollinger.com helps separate the signal from the noise. Here, we provide genuine insights on how current economic headwinds may affect the thriving NFT market. We’ll walk you through the biggest hurdles that companies can expect to encounter. More importantly, we’ll equip them with tangible strategies to keep them ahead of the curve.

The Looming Threat of US Tariffs

Originally meant to protect traditional industries, US tariffs have a ripple effect going much farther than typical manufacturing jobs. In addition, these tariffs harm American consumers by imposing tariffs on imports. In response, businesses need to reimagine their approach and embrace smarter, more flexible trade management solutions. For sectors deeply connected to global supply chains, such as the NFTaaS market, the consequences can be severe.

The numbers speak for themselves. Tariffs could raise costs by 10-15% for impacted sectors, and that includes those relying on blockchain technology and related infrastructure. This jump is due to inflated costs of key products and services required to build, launch, and maintain NFT-based initiatives. At present, the US might be the largest continent-sized county involved in the NFTaaS space. If adoption is slower – and especially in the fine arts and digital collectibles sectors, where price sensitivity is elevated – this may not happen. Think about it: a 10% tariff on the hardware needed to mint NFTs adds up quickly, potentially pricing out smaller artists and creators.

To better understand the impact of today’s tariffs, look back at disputes such as the 1960s “Chicken War.” This burgeoning trade dispute played out in this early period between the US and the now defunct European Economic Community (EEC). In retaliation, retaliatory tariffs were added. This includes a long-existing 25% tariff on light trucks from Western Europe, which is still in effect today. This is an example of how trade disputes can cause irreparable impacts on targeted industries.

NFTaaS Market: Growth Projections

Though short-term trends may be stunted by US tariffs, the long-term trajectory for the NFTaaS market is decidedly bright. Experts predict a compound annual growth rate (CAGR) of 36.9%, with the market reaching a staggering USD 34.7 billion by 2033. Market size value in 2032 USD 521.17 Billion CAGR growth 34.5%. NFT adoption is exploding in the entertainment and arts industries. This expansion is most apparent in creation, culture, development, and logistics.

North America is the largest contributor to the NFTaaS market, accounting for more than 40% of the market share in 2023. Huge investments in blockchain technologies feed this hegemony. At the same time, NFTs have exploded in popularity within the digital art community. The physical asset segment is anticipated to grow at the highest CAGR during the forecast period 2024-2030. So far in 2023, the collectibles segment had the highest portion of revenue.

This explosive development path further illustrates the huge potential behind NFTs, and the economies around their creation, management, and trading. To start, businesses need to proactively mitigate the risks associated with US tariffs. In doing so, they will maximize their ability to take advantage of this opportunity.

Strategies for Navigating Tariff Headwinds

Here are some actionable strategies to consider:

Diversification of Supply Chain

Businesses can consider diversifying their supply chains to reduce dependence on a single region or country, thereby minimizing the impact of tariffs on NFTaaS.

Tariff Optimization

For example, companies with more complex international supply chains should work proactively to identify opportunities to optimize tariff through tools like tariff exemptions or tariff credits.

Blockchain-based Solutions

Businesses can leverage blockchain technology to increase transparency and efficiency in their supply chain, making it easier to track and manage NFTaaS.

Partnerships and Collaborations

Businesses are able to work in coordination with other businesses or nonprofits. By pooling their resources and expertise, they can mitigate the risks that tariffs may pose to NFTaaS.

Investment in Research and Development

Companies can supercharge their NFTaaS approaches with healthy R&D spending. In return, this strategy will increase their competitiveness in the market and better position them to weather tariff woes.

Here are a few more strategies that businesses can use to navigate tariff headwinds:

  • Diversify supply chains: Companies can reduce their dependence on China by diversifying their supply chains and sourcing components from other countries, such as India and Vietnam, which are emerging as new manufacturing hubs.
  • Invest in domestic production: Businesses can invest in domestic production to reduce their reliance on foreign manufacturers and minimize the impact of tariffs on imported components.
  • Optimize production costs: Companies can explore ways to optimize their production costs, such as by implementing more efficient manufacturing processes or using alternative materials.
  • Blockchain-based solutions: Businesses can leverage blockchain technology to create more transparent and efficient supply chains, which can help reduce costs and mitigate the impact of tariffs.
  • Cloud-based infrastructure: Companies can use cloud-based infrastructure to reduce their dependence on physical hardware and minimize the impact of tariffs on imported components.

The NFTaaS market is ripe with promising prospects! Nevertheless, businesses need to be on guard against the ever-changing challenges that US tariffs pose. By diversifying supply chains, optimizing tariff strategies, and leveraging innovative technologies like blockchain, companies can not only weather the storm but position themselves for long-term success in this dynamic and rapidly evolving market.