President Trump’s push to stop minting pennies faces opposition as experts warn that phasing out the smallest coin could lead to increased costs and unintended consequences.
President Donald Trump has called for the U.S. Mint to halt production of pennies, criticizing the practice as wasteful, given that the cost of producing each penny exceeds its face value. In a post on his Truth Social platform, Trump voiced his frustration with the government’s spending on the small coin: “For far too long the United States has minted pennies which literally cost us more than 2 cents. This is so wasteful! Let’s rip the waste out of our great nation’s budget, even if it’s a penny at a time.”
However, Trump underestimated the cost — each penny actually costs more than 3 cents to produce. Despite the argument for eliminating the penny, experts warn that removing it could have unintended financial consequences, especially considering the high production costs associated with other small-value coins, particularly nickels.
According to the latest annual report from the U.S. Mint, the cost of producing a single penny is 3.7 cents, which includes 3 cents for production costs and 0.7 cents for administrative and distribution costs. In contrast, a nickel costs 13.8 cents to produce, with 11 cents allocated to production costs and 2.8 cents for distribution. These figures come from the Mint’s fiscal year report, which ends each September.
The cost of producing nickels has long been a concern for the U.S. Treasury, and the situation worsened in 2024. The Mint drastically reduced its production of nickels, minting only 202 million compared to 1.4 billion in the previous years. This reduction was an attempt to minimize losses, but even if the Mint only needed to produce an additional 850,000 nickels in 2025 to make up for the lost pennies, the savings from eliminating pennies would be nullified. In fact, the overall cost could rise significantly, particularly if the Mint is forced to produce 2 to 2.5 billion nickels annually.
Mark Weller, executive director of the Americans for Common Cents — a pro-penny group — warned that without pennies in circulation, the volume of nickels would likely increase, creating a financial burden for the Treasury. He pointed out that, in other countries that phased out their smallest coins, the number of larger coins produced increased to compensate for the lack of the smallest denomination.
The rising cost of nickel production has added to the problem. Since 2022, the cost of producing nickels has increased by about 20% due to the price surge in raw materials like copper and nickel. While pennies are composed of only 2.5% copper and 97.5% zinc, nickels contain 75% copper and 25% nickel, which makes their production more costly, especially as the prices of these metals have roughly doubled in recent years.
Despite these costs, some still advocate for eliminating the penny, citing the benefits in terms of transaction speed. The National Association of Convenience Stores (NACS) has supported the idea of getting rid of the penny, noting that even a second or two saved in each cash transaction could add up. Jeff Lenard, spokesperson for NACS, pointed out that removing the penny would lead to rounding cash transactions to the nearest nickel, which could streamline purchases in convenience stores and other retail environments.
The U.S. would not be the first country to abandon its smallest coin. In 2012, Canada stopped minting pennies and ceased using them in 2013, citing similar concerns over production costs and the growing irrelevance of the coin in daily transactions. While the U.S. government could potentially stop producing pennies, it would take an act of Congress to remove them from circulation, and this process would be costly. If the government were to buy back the already-issued pennies, as Canada did, it could incur significant expenses.
Moreover, pennies have become increasingly obsolete in daily transactions. They are often discarded or stored in drawers and jars, rarely remaining in circulation. Many people leave pennies behind in “leave-a-coin-take-a-coin” trays at stores, where they are often replaced by nickels. Some experts, like Harvard economics professor Gregory Mankiw, argue that when people leave small-denomination coins behind, it shows the currency is too insignificant to be useful.
As discussions about eliminating the penny continue, it’s clear that while the financial arguments against it are strong, the potential consequences of doing so, such as the rise in nickel production, need careful consideration. In the end, phasing out the penny may save money in some areas, but it could also result in higher costs for the U.S. Treasury in the long run.
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