By Oyin Adedoyin and Dalvin Brown

President Trump said Sunday that he had asked the U.S. Treasury Department to stop minting new pennies, part of an effort to cut down on what he called wasteful government spending.

His remarks revived a long-running debate over whether to get rid of the smallest denomination of U.S. currency. Here's a look at what it means for American consumers.

How much does it cost to make a penny?

It cost 3.7 cents to make one in 2024. That is up from 3.07 cents in 2023, 2.7 cents in 2022 and 2.1 cents in 2021.

It costs so much more to make a penny than its value that the U.S. Mint reported losing some $85.3 million last year on the nearly 3.2 billion pennies it produced.

What are pennies made of?

Today, they are made mostly of zinc and some copper.

In 2023, a bipartisan group in Congress reintroduced a bill that would authorize the U.S. Mint to alter the metal content of coins. The bill said changing the makeup of the coins could save millions of dollars a year.

The U.S. Mint estimated that it could save approximately $250 million over 10 years by suspending penny production, according to a 2019 report from the Government Accountability Office.

What are the pros of getting rid of pennies?

Trump isn't the first person to question the penny's necessity. The Mint and the Federal Reserve have proposed reducing the production of lower-denomination coins because of the cost of making them.

As Americans shift toward electronic payments, cash has become inconvenient and coins irrelevant for many. Americans throw away up to $68 million a year in coins, The Wall Street Journal reported last year. They are abandoned at airports and left in coin jars.

In a survey this month by the National Association of Convenience Stores, 36% initially favored eliminating the penny. That rose to 50% after participants learned about the cost of producing them.

What are the cons of getting rid of pennies?

Some fear it could drive up prices. Joshua Dairen, who runs a coffee shop in downtown Opelika, Ala., said he is afraid that eliminating pennies could push more customers to use credit cards, or to not come in at all. Merchants must pay fees for credit card processing, which eats into profit, he said. About 30% of customers pay with bills and coins.

"If everybody's using cards, that cost gets passed on to customers," he said.

If pennies went away completely, some prices would get rounded up. Sergio Briones, a convenience store owner in Laredo, Texas, worries that could hurt his shoppers. Roughly 70% of his customers make cash purchases, often small items such as gum or drinks.

"Our profit margins are already razor-thin," he said. But bumping a 96-cent item to an even dollar is a price hike his customers can't afford, he added.

Other prices would get rounded down. Rounding up and down to the nearest nickel shouldn't affect the price that customers pay in a store, said Jeff Lenard of the National Association of Convenience Stores, an industry group.

Another argument against doing away with the penny: It could drive up use of the nickel. The five cent coin cost nearly 14 cents to make last year.

How would a world without pennies look?

The Canadian government announced it would stop producing the penny in 2012, when its government found that it cost 1.6 cents to make at the time.

Canada would no longer distribute pennies, but those who had them could continue using them in payments and the penny retained its one-cent value. As pennies gradually left circulation, cash transactions were rounded to the nearest nickel.

When the Canadian government removed one-cent coins, it noted that New Zealand and Australia had stopped producing one-cent pieces in the 90s and it didn't increase inflation.

Does Trump have the power to get rid of pennies?

As a part of the U.S. Department of Treasury, the Mint derives its authority from Congress. Congress authorizes every coin and most medals the Mint manufactures, and oversees the Mint's operations. But the president may have the power to influence coin production.

"Trump's move doesn't claim to permanently eliminate the penny, which would clearly be Congress's decision," said Robert Whaples, an economist at Wake Forest University who has argued that the Mint should stop producing pennies. "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."

-- This explanatory article may be periodically updated.

Write to Oyin Adedoyin at oyin.adedoyin@wsj.com and Dalvin Brown at dalvin.brown@wsj.com

(END) Dow Jones Newswires

February 10, 2025 18:21 ET (23:21 GMT)

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