Former President Donald Trump has ordered the US Treasury to halt penny production, citing its manufacturing costs, which have exceeded the coin’s face value for nearly 20 years.
In a Truth Social post on Sunday night, Trump called the continued minting of the one-cent coin “wasteful” and instructed the Treasury to stop producing it.
The decision follows discussions on government spending inefficiencies and aligns with broader cost-cutting measures.
It remains unclear whether Trump has the authority to enforce this directive without congressional approval, raising questions about the legislative process required for such a move.
US Mint lost $85.3M in 2024
The cost of minting a penny has consistently outpaced its face value.
According to the US Mint’s 2024 annual report, each penny costs 3.69 cents to produce—more than three and a half times its worth.
This led to a loss of $85.3 million from penny production alone in the fiscal year ending September 2024.
The report also revealed that pennies accounted for 54% of all US coins minted during the period, highlighting the scale of the issue.
This financial burden extends beyond the penny. The five-cent coin, or nickel, also costs more to manufacture than its face value.
In FY2024, each nickel cost 13.78 cents to produce, leading to a $17.7 million loss for the Mint.
These figures have sparked debates about the necessity of low-value coin production and the inefficiencies it creates for the federal budget.
The Mint has repeatedly stated that rising material and production costs make these denominations increasingly unsustainable.
Congress approval needed
While Trump has ordered the Treasury to stop producing pennies, the move raises legal and logistical challenges.
Historically, changes to US currency have required legislative action, such as the discontinuation of the half-cent coin in 1857. If Congress does not intervene, the Treasury may face difficulties in unilaterally halting penny production.
Previous legislative proposals have addressed rounding cash transactions to the nearest five cents, eliminating the need for pennies in circulation.
If Trump’s directive gains political traction, lawmakers may be forced to consider similar rounding policies to avoid transactional inconsistencies in cash-based purchases.
Some industry experts argue that businesses could benefit from simplified transactions, while others caution against abrupt changes that might confuse consumers.
Future of pennies
The push to eliminate pennies is not new. Financial analysts have long argued that small-denomination coins no longer serve a practical purpose, especially with the rise of digital transactions and card-based payments.
Canada, for example, eliminated its penny in 2013, opting for rounding policies that simplify transactions.
Eliminating the penny could also impact businesses and consumers who rely on cash transactions.
Retailers may need to adjust pricing strategies, while customers could see subtle price shifts depending on rounding rules.
The nickel’s cost inefficiency may also spark further discussions on whether the five-cent coin should be next on the chopping block.
If both coins were removed from circulation, the US would need to implement a consistent approach to rounding rules to ensure price stability across industries.
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