Trump Orders U.S. Treasury to Halt Penny Production Amid Rising Costs

What to Know

• President Donald Trump has ordered the U.S. Treasury to stop producing pennies, citing their high production cost.
• The cost to produce and distribute a single penny is 3.7 cents, more than three times its face value.
• The move follows increased debate on eliminating the penny, with figures like Elon Musk supporting the effort.
• Some experts argue the U.S. should also phase out nickels, which are also costly to manufacture.
• The decision could lead to significant cost savings for the U.S. Mint and taxpayers.

Trump Instructs U.S. Treasury to Stop Penny Production

President Donald Trump announced Sunday that he has instructed Treasury Secretary Scott Bessent to halt the production of pennies, citing the excessive cost of producing the one-cent coin.

“For far too long, the United States has minted pennies that literally cost us more than 2 cents each. This is 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,” Trump stated in a social media post as he returned from the Super Bowl.

The penny has long been a topic of debate, with arguments both for and against its elimination. Supporters of phasing out the coin cite rising metal costs, inefficiency in transactions, and taxpayer burden, while opponents argue that eliminating it could impact businesses and pricing models.

The Rising Cost of Penny Production

In its 2024 fiscal year report, the U.S. Mint revealed that the cost to produce and distribute a penny has risen to approximately 3.7 cents, a more than 20% increase from the previous year. The primary reason for the rising cost is the increasing price of metals, particularly zinc and copper, which make up the composition of the coin.

The production of pennies has been a long-standing financial drain on government resources. According to the U.S. Mint’s 2023 annual report, the agency circulated approximately 4.1 billion pennies in that fiscal year alone. The cost of production for those pennies was significantly higher than their face value, leading to millions in unnecessary government spending.

The Debate Over Eliminating the Penny

The movement to abolish the penny gained momentum last month when Elon Musk’s Department of Government Efficiency highlighted the excessive production costs in a viral post on X (formerly Twitter). Musk’s stance has been echoed by economists and policymakers who see the penny as an outdated and impractical currency unit that burdens businesses and consumers alike.

In 2023, a New York Times Magazine article argued that eliminating the penny should have been done years ago. “The necessity of abolishing the penny has been obvious to those in power for so long that the inability to accomplish it has transformed the coin into a symbol of deeper rot,” the article noted.

The United States is not alone in considering the removal of low-denomination coins. Several countries, including Canada, Australia, and New Zealand, have successfully phased out their smallest currency denominations, citing similar reasons related to production costs and economic efficiency.

Could the U.S. Also Eliminate the Nickel?

The discussion surrounding the penny has also brought attention to the cost of producing nickels. In 2013, the Brookings Institution published an article advocating for the elimination of both pennies and nickels. The argument was that the cost of manufacturing a nickel (over 9 cents per coin) also significantly outweighs its value.

Some financial experts suggest that instead of relying on pennies and nickels, the U.S. could follow the example of other nations and implement rounding rules for cash transactions. This would allow transactions to round to the nearest five or ten cents, reducing the need for low-value coins while still maintaining price fairness.

What Happens Next?

With Trump’s directive, the next steps will likely involve Congressional hearings and economic impact assessments. Any move to eliminate the penny requires legislative approval, meaning there could be debates and delays before implementation.

If the initiative succeeds, the United States could see significant cost savings, particularly in minting and distribution expenses. Additionally, businesses that deal with large amounts of cash transactions could benefit from faster, more efficient transactions.

However, certain industries—such as cash-based businesses and vending machine operators—may need adjustments in pricing models and payment systems to accommodate the absence of the penny.

Final Thoughts

Trump’s decision to halt penny production marks a significant shift in U.S. monetary policy. If the move is successful, it could pave the way for further revisions to America’s currency system, possibly including the elimination of the nickel. With rising production costs and evolving financial technology reducing the need for physical cash, the era of small-denomination coins may be coming to an end.