President Donald Trump has announced his plan to stop minting pennies, citing the high cost of production. In a statement on his Truth Social platform, Trump said, “For far too long, the United States has minted pennies which cost us more than 2 cents each. This is so wasteful!”
However, Trump’s estimate of the cost was conservative.
According to the latest data from the US Mint, each penny costs 3.7 cents to make, including production, administrative, and distribution costs. While eliminating the penny might seem like a cost-saving measure, it could lead to a new problem: an increased demand for nickels. The US Treasury Department loses even more money on each nickel than each penny.
Each nickel costs 13.8 cents to produce. Mark Weller, executive director of Americans for Common Cents, a pro-penny group funded primarily by the company that provides the blanks used to make pennies, warned, “Without the penny, the volume of nickels in circulation would have to rise to fill the gap in small-value transactions, far from saving money, eliminating the penny shifts and amplifying the financial burden.
During the last fiscal year, the Mint tried to cut losses by making fewer nickels—only 202 million, down 86% from the previous two years.
Trump’s penny proposal raises concerns
This is significantly lower than the 3.2 billion pennies made in 2024 and the 4.1 billion produced in 2023. If the Mint had to produce 850 million additional nickels to meet demand, it would have wiped out any financial benefit from eliminating the penny.
Weller estimates that producing 2 to 2.5 billion nickels annually would be necessary, costing significantly more. The National Association of Convenience Stores has supported eliminating the penny to speed up transactions. Jeff Lenard, spokesman for the group, said, “Convenience stores sell a lot of products, but what they sell is speed of service.
The United States would not be the first country to eliminate its least valuable coin.
Canada stopped minting pennies in 2012 and stopped using them in 2013. However, eliminating the penny in the US would require an act of Congress, and the federal government would need to buy back all pennies in circulation, which could be an expensive task. Pennies are often stashed away in jars or left behind in coin dishes, reflecting their diminished utility.
Harvard economics professor Gregory Mankiw noted, “When people start leaving a monetary unit at the cash register for the next customer, the unit is too small to be useful.”
While eliminating the penny might seem financially prudent on the surface, the subsequent increase in nickel production costs could outweigh the benefits. Further analysis will determine if this change makes sense for the US economy.