President Donald Trump says he has ordered the US Mint to stop making pennies, which he correctly says cost more than 1c to produce.
“For far too long the United States has minted pennies which literally cost us more than 2c. This is so wasteful,” he said in a post on his Truth Social platform.
“Let’s rip the waste out of our great nations budget, even if it’s a penny at a time.”
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Trump actually undersold the cost argument — pennies cost more than 3c to produce.
But there’s a problem with his plan: Phasing out the penny could result in needing to make more nickels, and the US Treasury Department loses far more money on every nickel than it does on every penny.
“Without the penny, the volume of nickels in circulation would have to rise to fill the gap in small-value transactions,” American for Common Cents — a pro-penny group funded primarily by Artazn, the company with the contract to provide the blanks used to make pennies — said.
“Far from saving money, eliminating the penny shifts and amplifies the financial burden.”
According to the latest annual report from the US Mint, each penny cost 3.7c to make, including the 3c for production costs, and 0.7c per coin for administrative and distribution costs.
But each nickel costs 13.8c, with 11c of production costs and 2.8c of administrative and distribution costs. These figures are for the government’s fiscal year, which ends in September.
During that fiscal year, the Mint tried to cut those losses by making far fewer nickels — only 202 million, down 86 per cent from the 1.4 billion nickels it minted in each of the two previous years.
That’s also far less than the 3.2 billon pennies it made in 2024, the 4.1 billion it made in 2023 and 5.4 billion it made in 2022.
Even if the Mint has to make only 850,000 additional nickels in 2025 to meet demand from retailers, that would wipe out the savings of eliminating the penny. If goes back up to making 1.4 million nickels a year, that would cost $78 million more than the cost of pennies it is no longer making.
The Mint would likely have to make more than that — probably in the range of 2 million to 2.5 million nickels a year — if it stops making pennies permanently, Americans for Common Cents executive director Mark Weller said, based on the track record in other countries that dropped their lowest valued currency.
“In most countries, the lowest denomination coin is the most minted coin,” he said.
The price of making pennies has been relative steady in recent years, while the cost of producing nickels has been climbing, rising about 20 per cent since 2022, because of the difference in the cost of raw materials.
Nickels are made of 75 per cent copper and 25 per cent nickel, while pennies — despite their reputation of being a copper coin — are copper-plated zinc, meaning they are only 2.5 per cent copper and 97.5 per cent zinc.
While all metal prices can be volatile, zinc prices are essentially the same as they were in late 2016, while copper and nickel prices are roughly double the price they were then.
Why ditching the penny may still make sense
Still, there are arguments for dumping the penny, no matter the costs.
The National Association of Convenience Stores has in the past agreed with the idea of getting rid of the penny to speed transaction time, even if only by a second or two for each customer paying with cash.
“Convenience stores sell a lot of products but what they really sell is speed of service,” group spokesperson Jeff Lenard said.
He couldn’t say if nickel usage would increase, but he did say that without the penny cash transactions would be rounded to the nearest nickel.
And the United States wouldn’t be the first to dump its least valuable coin. Canada stopped minting their pennies in 2012 and stopped using them in 2013.
Australia ceased minting 1c and 2c coins much earlier, removing them from in February 1992 — although they remain legal tender — while New Zealand removed 1c and 2c coins from circulation in 1989.
Weller doesn’t dispute that Trump can order Treasury to stop making the penny. It stopped making the dollar coin for general circulation in 2011 due to lack of demand.
But to stop the use of pennies already in circulation would take an act of Congress. And that would require the federal government to buy back the already-issued pennies, which turned out to be more expensive than anticipated in Canada, Weller said.
While gumball machines, parking meters, toll booths and even vending machines once accepted pennies, few accept them today.
One reason the government has to make so many pennies every year is a large percentage of them don’t remain in circulation. They are stashed in penny jars or junk drawers at home. Or they fall on the ground and people don’t even bother to pick them up.
Many people leave behind the pennies they get as change in leave-a-coin-take-a-coin dishes on the counters of many retailers. Those dishes are increasingly holding nickels as well, which also have few uses.
“When people start leaving a monetary unit at the cash register for the next customer, the unit is too small to be useful,” Harvard economics professor Gregory Mankiw, a former chairman of the President’s Council of Economic Advisers under president George W. Bush, said.