President Donald Trump promised to penny-pinch the federal budget if reelected. Turns out he meant that literally: On Sunday, Trump says he instructed Treasury Secretary Scott Bessent to cease production of the penny to further the goal of reducing unnecessary government spending.
“For far too long the United States has minted pennies which literally cost us more than 2 cents. This is so wasteful!” Trump wrote on Truth Social. “Let’s rip the waste out of our great nations budget, even if it’s a penny at a time.”
As with many of the other orders Trump has signed or given so far in his second term, whether or not he actually has the authority to order the Treasury to stop minting pennies is unclear. The United States Congress authorizes every coin and most medals that the U.S. Mint manufactures, not the president, according to the U.S. Mint.
Legality aside, opinions on the directive are mixed. Some politicians have proposed eliminating the coin since at least the 1990s, though have never gained enough support to do so. Doing so would save the government money, they say: Producing the coins costs a pretty penny—or three, rather, as minting a single cent came with a price tag of 3.69 cents in 2024. Given the Mint minted over 3 billion pennies last year, that’s a significant cost.
The potential cost savings has been well known for a long time: President Barack Obama supported eliminating the penny while in office. He also asked Congress to change the mix of metal that goes into making pennies and nickels to save money. Here’s what to know about the debate:
Who opposes the penny ban?
In January, Americans for Common Cents (ACC), a pro-penny lobbyist group, called Trump advisor Elon Musk’s suggestion to eliminate the penny misguided. The organization—perhaps the country’s most zealous defenders of the currency—noted that Musk’s Department of Government Efficiency exaggerated the actual cost of producing pennies by combining both penny and nickel production.
Another factor: Nickel production would need to be essentially doubled to fill the gap in small-value transactions, the ACC says (that’s because cash transactions could be rounded to the nearest five cents). Since the U.S. loses more money producing nickels than it does pennies already—a nickel cost 13.78 cents to produce in 2024, according to the U.S. Mint—the U.S.’s financial burden would actually be increased.
“Since each nickel represents a significantly higher loss per unit, this would drive up overall production costs for the government,” the ACC wrote.
Other countries have eliminated low-denomination coins
Countries including Australia, Canada, New Zealand, Sweden, and others have eliminated low-denomination coins in recent years. Australia got rid of its 1- and 2-cent coins in 1992, while Canada stopped distributing its penny in 2012.
The U.S. has also eliminated a coin with little to no trouble—the half-cent coin was minted until 1857. When it was phased out, transactions were rounded to the nearest cent.
In Australia, eliminating the 1- and 2-cent coins “hasn’t mattered at all,” Andrew Stoeckel, an honorary professor at the Australian National University’s Centre for Applied Macroeconomic Analysis, told the New York Times.
Cash transactions change
With fewer and fewer 1- and 2-cent coins in circulation, other countries, like Canada, have rounded their cash purchases to the nearest 5 or 10 cents (purchases made other ways, like with a credit card, are still calculated to the nearest cent). That can take a while for consumers to get used to, and could potentially mean paying more on already high prices—although many economists do not see this as a legitimate worry.
In fact, a 2007 report by Robert Whaples, a professor of economics at Wake Forest University, looked at data on nearly 200,000 transactions from a convenience store chain. It found that rounding prices would have virtually no effect on consumers.
“It will be important to have rules in place regarding how cash transactions that are not divisible by 5 cents should be handled, most likely by rounding to the nearest 5 cents, and also regarding how existing stocks of pennies can be used and exchanged,” said Robert K. Triest, economics professor at Northeastern University.
