After 232 years in circulation, President Donald Trump has ordered the U.S. Treasury to stop minting new pennies. Trump argues that the penny is wasteful, as the cost of producing each coin far exceeds its face value. Currently, it costs about four cents to manufacture a single penny, primarily due to the use of raw materials like zinc and the intricate molding process involved. In 2024 alone, the U.S. spent $12.8 billion to mint 3.2 billion pennies, making the production cost four times the coin’s actual value.
Although the penny has become obsolete over the last century—no longer even enough to buy a simple piece of gum—there are arguments in favor of keeping it. Some economists claim that the penny keeps prices in check, suggesting that businesses will be more likely to round prices up, rather than down, which could lead to an inflationary impact. Additionally, pennies have long been a source of charitable donations, with organizations emphasizing that even small contributions can make a meaningful impact.
However, most economists believe that due to the rise in cashless transactions, there will be little to no impact on the average consumer. The larger issue lies in the fact that without the penny, more influence will be placed on the nickel, which costs the US Treasury even more to produce. Each nickel costs about 13 cents to create, exceeding that of the penny. Ditching the penny would cause the treasury to increase the production of the nickel, eliminating the cost savings. Compounding the issue, the price of nickel production has risen about 20% since 2022, and is projected to keep climbing due to increasing raw material prices.
Other countries, such as Canada and Australia have already discontinued their smallest coins. For years, U.S. lawmakers have attempted, unsuccessfully, to phase out the penny. Legal scholars suggest that while Congress may ultimately need to pass legislation to formally eliminate the penny, the Secretary of the Treasury might be able to stop its production through an executive order from the President.
Looking ahead, it remains to be seen whether the penny will officially be discontinued and, if it is, what impact it may have on consumer prices.
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