US President Donald Trump has announced that he has ordered the US Mint to stop producing pennies, citing their high production costs. However, experts say that phasing out the penny could lead to an increase in nickel production and result in losses for the Treasury Department.
According to the latest annual report from the US Mint, each penny cost 3.7 cents to make, including production and administrative costs. In contrast, each nickel costs 13.8 cents to produce. If the Mint were to stop making pennies, it would need to increase nickel production to meet demand, which could result in significant losses.
Mark Weller, executive director of Americans for Common Cents, said that eliminating the penny would not be cost-effective and could lead to increased costs. “Far from saving money, eliminating the penny shifts and amplifies the financial burden,” he stated.
The US Mint produced over 5.4 billion pennies in 2022 alone, with many of them being stored at home or lost. This suggests that reducing the number of pennies in circulation could lead to increased costs due to the need to produce more nickels.
Despite the high costs, some experts argue that eliminating the penny could be beneficial for businesses and consumers. The National Association of Convenience Stores has expressed support for getting rid of the penny, citing its potential to speed up transactions.
However, replacing the penny with a nickel would require an act of Congress and would involve buying back already-issued pennies, which was found to be more expensive than anticipated in Canada.
Source: https://edition.cnn.com/2025/02/10/business/costs-of-pennies-and-nickels/index.html