In an unprecedented move in the realm of American finance, President Donald Trump announced on Sunday the cessation of new one-cent coin production. "For far too long, we've been minting pennies that actually cost us more than two cents each. This is sheer waste! I've instructed my Treasury Secretary, Scott Bessent, to halt the production of new pennies. We must eliminate waste from the budget of our great nation, even if it's penny by penny," Trump declared on Truth Social.
Official statistics reveal that manufacturing each penny costs over two cents due to materials and production expenses, resulting in significant annual expenditure for the U.S. Mint. This decision has sparked widespread debate, as while Trump can influence the Treasury Department's operations, the authority over coin production lies with Congress, as established by the Mint's regulations since 1792.
Financial Impact and Historical Context
In 2024, the production of pennies led to losses exceeding $85 million, with approximately 3.2 billion coins minted. The cost per penny, known as "kilo" in Cuban slang, reached $0.037, surpassing its face value. Furthermore, the five-cent coin is also a financial burden, costing $0.14 per unit to produce.
Economists suggest that eliminating the penny will have minimal economic impact, as cash transactions will simply round to the nearest nickel, causing little disruption to consumers. This move is not unique globally; countries like Canada and several European nations have already phased out their lowest-denomination coins without significant negative effects. In Canada, ceasing penny production in 2012 resulted in substantial savings and streamlined transactions.
Public Reaction and Numismatic Implications
While some Americans mourn the end of an iconic coin that has featured Abraham Lincoln's image since 1909, others see a chance for existing pennies to gain numismatic value. The debate continues, but the era of the penny in the United States is drawing to a close, marking yet another chapter in the contentious Republican administration.
Trump's decision underscores the notion that "the kilo has no change," a Cuban expression indicating a point of no return where no further options remain. In this administration, there is no room for losses.
Understanding the Implications of Penny Elimination
Why is the U.S. stopping the production of pennies?
The U.S. is halting penny production because the cost to produce each penny exceeds its face value, contributing to unnecessary government spending.
What will happen to cash transactions without pennies?
Cash transactions will be rounded to the nearest five cents, minimizing the impact on consumers and simplifying the transaction process.
How have other countries managed without small-denomination coins?
Countries like Canada have successfully eliminated small-denomination coins, resulting in cost savings and more efficient transactions without significant economic disruptions.