Key Takeaways:

• President Trump has directed the U.S. Treasury to cease minting new pennies, citing rising production costs.
• The cost to mint a penny exceeds its face value, prompting widespread calls for its discontinuation.
• Experts express concerns about the potential economic impacts, including rounding prices and inflation.
• The penny's fate echoes similar actions by other countries, notably Canada, which eliminated the coin in 2012.

President Donald Trump announced via his Truth Social platform that he has instructed the U.S. Treasury to halt the production of one-cent coins, a move sparked by concerns over rising production costs. He criticized the current state of penny manufacturing, stating, "For far too long the United States has minted pennies which literally cost us more than 2 cents. This is so wasteful!" These comments come amid a larger initiative led by Trump and Elon Musk’s Department of Government Efficiency (DOGE) to identify and eliminate government waste.

Recent reports from the U.S. Mint have highlighted that it costs approximately 3.69 cents to produce a penny, which has led to the ongoing debate about the coin's practicality and significance. The Mint lost an estimated $85.3 million in fiscal year 2024 due to penny production, indicating a broader trend of the coin becoming increasingly unprofitable. This pattern is not unique to the penny, as even nickels are reported to cost nearly 14 cents to produce, making both denominations economically burdensome to maintain.

While Trump's decision has received praise from some, including Colorado's Democratic Governor Jared Polis, who noted, "As well as saving taxpayers hundreds of millions of dollars, there are major environmental benefits to eliminating the penny," others remain skeptical. Critics argue that eliminating the coin could lead to a "rounding tax", where prices for cash transactions are rounded to the nearest nickel, potentially disadvantaging consumers. Mark Weller, the director of Americans for Common Cents, warned of the negative consequences such an action could have on lower-income groups relying on cash transactions, asserting, "Every penny saved is a win for taxpayers!"

Historical context reveals that the penny's discontinuation has been a topic of discussion for decades, with notable attempts by previous lawmakers to either suspend its production or eliminate it altogether yielding no success. Similarly, the success of other countries, including Canada, which ceased minting pennies in 2012, illustrates a growing global trend toward currency modernization. The Canadian government reported saving millions annually by removing the penny from circulation.

A consensus among economists hints at a potential future without the penny: “It is bad for consumers and the economy,” said Weller, noting public sentiment suggests that most people do not want to round up their prices. This sentiment reflects a significant shift in how currency is utilized in a predominantly cashless society.

The future of the penny remains uncertain, as any permanent change would likely require congressional approval. The legislation governing currency production dictates operations within the Mint, leading many to speculate whether Trump’s directive can be fully realized without legislative intervention. As the debate continues, the U.S. must weigh the costs and benefits of maintaining a coin that many Americans have deemed obsolete.

For more detailed coverage, see the reports from Channel News Asia, NPR, and Newsweek.