Trump needs to finish penny manufacturing. Will it have an effect on shoppers?
O’Leary Ventures Chairman Kevin O’Leary shares whether or not he is involved about President Donald Trump’s tariffs on metal and aluminum, the destiny of the U.S. penny and the dealing with of the TikTok sale.
President Donald Trump is in search of to finish manufacturing of latest pennies and just lately instructed Treasury Secretary Scott Bessent to make that occur.
Trump revealed late Sunday evening he had “instructed my Secretary of the US Treasury to cease producing new pennies,” arguing that “for much too lengthy the US has minted pennies which accurately price us greater than 2 cents” and that “that is so wasteful!”
Former President Donald Trump, the Republican presidential nominee, arrives to talk throughout an election evening occasion on the Palm Seaside Conference Heart Nov. 6, 2024, in West Palm Seaside, Fla. ( Chip Somodevilla/Getty Photos / Getty Photos)
The transfer has raised the query of how American shoppers might be affected and, based on one knowledgeable, the impression will likely be negligible.
“I don’t assume it’s gonna have any impression on shoppers. I feel it’s only a very smart factor to do, as a result of no one makes use of pennies anymore. No one wants pennies,” David Bahnsen, founding father of the Bahnsen Group, instructed FOX Enterprise. “Simply as a matter of primary practicality and value advantages, the research I’ve seen are that it prices three cents to make a penny, so there’s one thing quite backwards about that math.”
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The price of making and distributing a penny stood at 3.69 cents in 2024, the U.S. Mint’s most up-to-date annual report indicated.
The U.S. Mint shipped 3.17 billion new pennies final yr. The gross price of these pennies, $117 million, was considerably greater than their $31.7 million mixed worth, based on the report.
“By way of affecting shoppers, does it make a distinction to their spending habits to not have precise change to the extent that that exists in any respect? It’s so marginal it might be a rounding error,” Bahnsen stated.
Pennies are displayed at Glenview Coin & Collectibles July 6, 2006, in Glenview, Unwell. (Tim Boyle/Getty Photos / Getty Photos)
Canada moved away from its model of the penny over a decade in the past, and different international locations like Australia, New Zealand and Sweden took related motion properly earlier than that. In Canada, after the federal government began phasing out pennies, rounding up or all the way down to the closest 5 cents turned frequent for money transactions.
TRUMP SAYS HE HAS INSTRUCTED US TREASURY TO STOP MINTING NEW PENNIES: ‘THIS IS SO WASTEFUL!’
Bahnsen stated rounding money transactions “is simply much less prone to occur in a extra digital cost atmosphere,” noting not many individuals “are paying with money” today.
A report launched final summer season by Federal Reserve Monetary Providers discovered 32% of funds in October 2023 used bank cards and the same however barely smaller share — 30% — used debit playing cards. Funds with money, in the meantime, represented 16% of transactions, based on the report.
The Canadian authorities stated in its 2012 financial motion plan that eliminating pennies in New Zealand, Australia and different international locations “didn’t trigger a rise in worth inflation.”
The U.S. stopping manufacturing of latest pennies would have little bearing on suggestions, Bahnsen additionally stated.
He additionally famous present pennies will nonetheless be in circulation “however you’re actually speaking about extra of a collectible merchandise, not a shopper merchandise, not a transactional foreign money that individuals are paying.”
“In the end, President Trump’s motive right here was to only be extra environment friendly, and I feel that the Treasury Division’s losing some huge cash making pennies that don’t have any actual industrial use,” Bahnsen instructed FOX Enterprise. “This isn’t an earth-shattering occasion, but it surely’s one thing that marginally is extra environment friendly, and that’s what the Treasury Division’s job is.”
Individuals for Widespread Cents, which has been vital of Trump’s effort, argued in a late January press launch that ditching the penny “received’t save the federal government cash.”
A pile of U.S. pennies in a photograph illustration in Washington, D.C., Feb. 10, 2025. (Saul Loeb/AFP through Getty Photos / Getty Photos)
“Many Mint overhead prices would stay and need to be absorbed by different cash with out the penny,” Govt Director Mark Weller stated. “Additionally, there could be higher demand for costly nickels, which implies much more prices.”
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The group receives important funding from Artazn, based on CNN. That agency reportedly provides blanks which are utilized in Mint coin manufacturing.
Individuals for Widespread Cents has proposed the federal government “reexamine how the Mint allocates its overhead prices and deal with decreasing the price of producing nickels” as a substitute of transferring away from pennies.
It price the Mint almost 13.8 cents to supply a nickel final yr, based on the company.
The group has additionally pushed again towards arguments that the penny doesn’t have worth and has argued a “rounding tax” ensuing from eliminating the one-cent denomination would “disproportionately have an effect on” folks with out entry to banking or strategies of non-cash cost.
