Trump Wants to Get Rid of the Penny—But Is the Move Going to Save Money?
Donald Trump directed the Treasury Department to stop minting new pennies on Sunday, citing wasteful government spending, but experts warn the move could increase costs elsewhere.
The US Mint loses money on each penny produced, spending 3.7 cents to create the one-cent coin in 2024, up from 2.1 cents in 2021. The agency reported an $85.3 million loss last year on producing nearly 3.2 billion pennies.
Pennies currently consist of 97.5% zinc and 2.5% copper. A bipartisan congressional bill introduced in 2023 proposed changing the metal content of coins to reduce production costs, potentially saving millions annually.
Eliminating penny production could save $250 million over a decade, according to a 2019 Government Accountability Office report. A recent survey by the National Association of Convenience Stores found 50% of respondents supported elimination after learning about production costs.
However, experts warn the move could force increased production of nickels, which cost 13.8 cents each to make. The Mint would need to produce an additional 2 million to 2.5 million nickels annually to replace pennies, according to Americans for Common Cents, a pro-penny group.
“Far from saving money, eliminating the penny shifts and amplifies the financial burden,” said the organization, which receives funding from Artazn, the penny blank supplier.
Small business owners express concerns about price rounding. Some fear the change could push more customers toward credit card payments, increasing processing fees. Others worry about impacts on cash-paying customers making small purchases.
Canada eliminated its penny in 2012, rounding cash transactions to the nearest nickel. The government reported no significant inflation impact, following similar moves by New Zealand and Australia in the 1990s.
While Trump can halt penny production, as the Treasury did with dollar coins in 2011, eliminating pennies from circulation would require congressional approval.
Information for this story was found via the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
