Heads or Tails? Trump Instructs Treasury to Stop Making Pennies

A man shows a handful of the U.S. cent in Washington on July 18, 2006. With the prices of zinc and copper going through the roof, the smallest American denomination is now worth more as a commodity than a currency. Jim Watson/AFP via Getty Images

President Donald Trump confirmed over the weekend that he requested the Treasury Department to stop producing pennies.

In a Feb. 9 Truth Social post, the president said he asked Treasury Secretary Scott Bessent to halt the production of one-cent coins, calling them “wasteful.”

“For far too long the United States has minted pennies which literally cost us more than 2 cents,“ the president said. ”This is so wasteful! I have instructed my Secretary of the U.S. Treasury to stop producing new pennies. Let’s rip the waste out of our great nation’s budget, even if it’s a penny at a time.”

Last month, the Department of Government Efficiency (DOGE), the federal task force created by Trump to eliminate waste, cut spending, and improve efficiency, highlighted the costs behind the penny on X, writing that minting 4.5 billion pennies in 2023 cost taxpayers over $179 million.

Bessent has yet to address the status of the penny publicly.

Making Cents of the Cent

The U.S. Mint created the nation’s first circulating penny in 1793, which was produced entirely from copper. Over the years, the cent’s metal content and design have changed.

Today, the penny is made primarily out of zinc with copper plating.

For the new administration, the issue is that the federal government spends more to create one-cent coins than its face value is worth.

According to the U.S. Mint’s annual report, the federal government spent about 3.7 cents in fiscal year 2024 to create a single penny. This was the 19th consecutive year production costs outpaced the penny’s face value. Approximately 3.2 billion pennies were manufactured last year, slightly down from fiscal year 2023.

One reason for the elevated production costs is ballooning zinc prices. While the industrial metal has eased from its March 2022 peak, prices have risen 92 percent over the last 10 years.

Over the decades, there have been congressional efforts to kill the penny.

The 1989 Price Rounding Act, the 2006 Currency Overhaul for an Industrious Nation (COIN), and the 2017 Currency Optimization Innovation and National Savings (COIN) Act would have eliminated the penny and mandated rounding prices to the nearest five cents. None of these bills became law.

Even former President Barack Obama weighed in on the issue.

“This is not going to be a huge savings for government, but anytime we’re spending more money on something that people don’t actually use, that’s an example of something we should probably change,” Obama said in a 2013 Google+ Hangout.

Obama may have touched upon a potential hurdle for the United States to overcome its penny fixation.

“We remember our piggy banks and counting up all our pennies and taking them in and getting a dollar bill or a couple dollars from them, and maybe that’s the reason people haven’t gotten around to it,” he said.

Other Countries Down to Their Last Penny

The United States would not be the first country to ditch the penny.

In 1989, New Zealand stopped minting pennies because production costs exceeded their value. A few years later, Australia followed suit and discontinued its low-denomination coin. The Netherlands adopted the policy in 2004.

Nickels are seen in a 2016 photo illustration. Graeme Roy/The Canadian Press

In 2012, Canada began phasing out the penny and requested businesses to round prices to the nearest nickel for cash transactions. Digital transactions continued to be billed to the nearest cent. The penny is still accepted in commerce but no longer produced.

Brazil, Finland, Israel, Norway, Sweden, and Switzerland have also withdrawn low-denomination coins from circulation.

A Penny for Your Thoughts

While opinion polling on this issue is minimal, the available research suggests mixed views about the low-value coin.

A recent National Association of Convenience Stores poll found that more than one-third (36 percent) of consumers favored eliminating the penny.

According to a 2019 Americans for Common Cents survey, more than two-thirds (68 percent) favored keeping the penny in circulation. The pro-cent organization also found that 64 percent opposed abolishing the penny and installing a price rounding system.

A 2020 Federal Reserve Bank of Richmond paper suggested that killing the penny would most affect the impecunious.

“Low-income consumers stand to be most affected by the change because they are more likely to be unbanked and reliant on cash for transactions,” the regional central bank wrote. “In the short term, at least, merchants might round purchases for customers paying in cash but not for those paying with card, potentially disadvantaging consumers who have no choice but to pay in cash.”

Additionally, a widely shared 2001 paper by a Penn State University economist discussed a “rounding tax.” If merchants added a couple of extra cents to prices, consumers would be hit with about $600 million annually, which would have a greater impact on low-income households.

However, a 2023 Federal Reserve Bank of Atlanta study concluded that rounding prices to the nearest nickel would unlikely generate “any significant inflationary consequences.”

In the Nickel of Time

Could the nickel be the next target for the administration?

It costs 13.8 cents to manufacture a five-cent nickel. The U.S. Mint says that 11 cents are dedicated to production costs, and the remaining 2.8 cents are allocated to administrative and distribution costs.

If the White House follows through on phasing out the penny, the United States will likely need to increase the volume of nickels in circulation to offset the loss of the penny. Ultimately, it might cost more to eradicate the one-cent coin and ramp up the output of five-cent nickels.

Although payment apps and credit cards are prevalent for transactions, many consumers depend on cash, a growing preference in today’s hyper-digital marketplace.

A 2023 survey by the Atlanta Fed discovered that almost 90 percent of consumers used cash, and one-quarter of in-person purchases were completed with physical money.