Trump wants to end penny production; will it affect consumers?
2025-02-12
Category: economic

President Donald Trump is seeking to end production of new pennies and recently told Treasury Secretary Scott Bessent to make that happen.&#xA0; Trump revealed late Sunday night he had &quot;instructed my Secretary of the US Treasury to stop producing new pennies,&quot; arguing that &quot;for far too long the United States has minted pennies which literally cost us more than 2 cents&quot; and that &quot;this is so wasteful!&quot;  The move has raised the question of how American consumers could be affected and, according to one expert, the impact will be negligible.&#xA0; &quot;I don&#x2019;t think it&#x2019;s gonna have any impact on consumers. I think it&#x2019;s just a very sensible thing to do, because nobody uses pennies anymore. Nobody needs pennies,&quot; David Bahnsen,&#xA0;founder of the Bahnsen Group, told FOX Business. &quot;Just as a matter of basic practicality and cost benefits, the studies I&#x2019;ve seen are that it costs three cents to make a penny, so there&#x2019;s something rather backwards about that math.&quot; TRUMP IS &#x2018;RIGHT&#x2019; TO ORDER THE US TO DITCH THE &#x2018;STUPID&#x2019; PENNY, KEVIN O&apos;LEARY SAYS The cost of making and distributing a penny stood at 3.69 cents in 2024, the U.S. Mint&#x2019;s most recent annual report indicated. The U.S. Mint shipped 3.17 billion new pennies last year. The gross cost of those pennies, $117 million, was significantly higher than their $31.7 million combined value, according to the report. &quot;In terms of affecting consumers, does it make a difference to their spending habits to not have exact change to the extent that that exists at all? It&#x2019;s so marginal it would be a rounding error,&quot; Bahnsen said.  Canada moved away from its version of the penny over a decade ago, and other countries like Australia, New Zealand and Sweden took similar action well before that. In Canada, after the government started phasing out pennies, rounding up or down to the nearest five cents became common for cash transactions.&#xA0; TRUMP SAYS HE HAS INSTRUCTED US TREASURY TO STOP MINTING NEW PENNIES: &#x2018;THIS IS SO WASTEFUL!&#x2019; Bahnsen said rounding cash transactions &quot;is just less likely to happen in a more digital payment environment,&quot; noting not many people &quot;are paying with cash&quot; these days. A report released last summer by&#xA0;Federal Reserve Financial Services found 32% of payments in October 2023 used credit cards and a similar but slightly smaller share &#x2014; 30% &#x2014; used debit cards. Payments with cash, meanwhile, represented 16% of transactions, according to the report.&#xA0; The Canadian government said in its 2012 economic action plan that getting rid of pennies in New Zealand, Australia and other countries &quot;did not cause an increase in price inflation.&quot; The U.S. stopping production of new pennies would have little bearing on tips, Bahnsen also said.&#xA0; He also noted existing pennies will still be in circulation &quot;but you&#x2019;re really talking about more of a collectible item, not a consumer item, not a transactional currency that people are paying.&quot;&#xA0; &quot;Ultimately, President Trump&#x2019;s motive here was to just be more efficient, and I think that the Treasury Department&#x2019;s wasting a lot of money making pennies that have no real commercial use,&quot; Bahnsen told FOX Business. &quot;This isn&#x2019;t an earth-shattering event, but it&#x2019;s something that marginally is more efficient, and that&#x2019;s what the Treasury Department&#x2019;s job is.&quot;&#xA0; Americans for Common Cents, which has been critical of Trump&#x2019;s effort, argued in a late January press release that ditching the penny &quot;won&#x2019;t save the government money.&quot;&#xA0;  &quot;Many Mint overhead costs would remain and have to be absorbed by other coins without the penny,&quot; Executive Director Mark Weller said. &quot;Also, there would be greater demand for expensive nickels, which means even more costs.&quot; HOW TRUMP MIGHT GET RID OF THE PENNY &#x2013; AND WHAT COULD COME NEXT FOR YOUR POCKETBOOK CHANGE The group receives significant funding from Artazn,&#xA0;according to CNN. That firm reportedly supplies blanks that are used in Mint coin production. Americans for Common Cents has proposed the government &quot;reexamine how the Mint allocates its overhead costs and focus on reducing the cost of producing nickels&quot; instead of moving away from pennies.&#xA0; It cost the Mint nearly 13.8 cents to produce a nickel last year, according to the agency.&#xA0; The group has also&#xA0;pushed back against arguments that the penny doesn&#x2019;t have value and has argued a &quot;rounding tax&quot; resulting from getting rid of the one-cent denomination would &quot;disproportionately affect&quot; people without access to banking or methods of non-cash payment.&#xA0;