Trump's Plan To Ditch Pennies — Pros & Cons For Businesses and Customers

President Donald Trump has directed the Treasury Department to halt new penny production, rekindling the debate over America’s costliest small change.

Each penny cost $0.037 to produce in 2024, up from $0.021 in 2021, according to The Wall Street Journal on Monday. The U.S. Mint lost $85.3 million last year producing nearly 3.2 billion pennies, mostly made of zinc and copper.

The move could save substantial government funds. The U.S. Mint has estimated that suspending penny production would save approximately $250 million over 10 years, the Government Accountability Office said in a 2019 report.

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Public opinion appears mixed. A National Association of Convenience Stores survey found 36% initially supported eliminating pennies, rising to 50% after learning about production costs, The Journal said.  

Americans discard up to $68 million in coins annually, The Journal reported last year..

However, small business owners worry about potential impacts. Joshua Dairen, an Alabama coffee shop owner, told The Journal fears penny elimination could push more customers toward credit cards, increasing processing fees that cut into profits. Currently, about 30% of his customers use cash.

“If everybody’s using cards, that cost gets passed on to customers,” Dairen said.

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Price rounding also concerns some merchants. Sergio Briones, a Texas convenience store owner with 70% cash transactions, worries about effects on low-income customers. “Our profit margins are already razor-thin,” he told The Journal, noting that rounding a $0.96 item to a dollar could hurt his shoppers.

Canada’s 2012 penny elimination offers a potential model. The government stopped producing pennies when costs reached $0.016 cents each, implementing a system where cash transactions round to the nearest nickel. 

Following similar moves in Australia and New Zealand’s in the 1990s, Canada reported no significant inflation impact.

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While Congress authorizes coin production, economist Robert Whaples of Wake Forest University suggests Trump may have authority to pause minting, The Journal reported. “Trump’s move doesn’t claim to permanently eliminate the penny, which would clearly be Congress’s decision. Rather, it halts minting new pennies, and the decision about how many pennies to produce each year seems to be within the executive branch’s power," he said.

One potential drawback; increased nickel usage. The $0.05 coin cost nearly $0.14 cents to produce last year, potentially creating new cost inefficiencies.

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