Trump says minting coins is a loss to exchequer; is he right?

President Donald Trump says he has directed the Treasury Department to stop minting new pennies, citing the rising cost of producing the one-cent coin.

“For far too long the United States has minted pennies which literally cost us more than 2 cents. This is so wasteful!” Trump wrote in a post on Sunday night (February 9) on his Truth Social site. “I have instructed my Secretary of the US Treasury to stop producing new pennies.”

“Let's rip the waste out of our great nation’s budget, even if it's a penny at a time,” Trump wrote in his post.

What prompted the move?

The Department of Government Efficiency (DOGE) headed by Elon Musk raised the prospect in a post on X last month highlighting the cost of producing the penny.

The US Mint reported losing $85.3 million in the 2024 fiscal year that ended in September on the nearly 3.2 billion pennies it produced. Every penny cost nearly $0.037 - up from $0.031 the year before.

The mint also loses money on the nickel, with each of the $0.05 coins costing nearly $0.14 to make.

Also Read: ‘So wasteful’: Trump directs US treasury to stop minting new pennies

It is unclear whether Trump has the power to unilaterally eliminate the lowly one-cent coin.

“The process of discontinuing the penny in the US is a little unclear. It would likely require an act of Congress, but the Secretary of the Treasury might be able to simply stop the minting of new pennies,” Robert K Triest, an economics professor at Northeastern University, said last month.

Arguments to eliminate the penny

Proponents of eliminating the coin have cited cost savings, speedier checkouts at cash registers, and the fact that a number of countries have already eliminated their one-cent coins. Canada, for instance, stopped minting its penny in 2012.

It wouldn't be the first time the US eliminated its least valuable coin. The half-cent coin was discontinued by Congress in 1857.

Members of Congress have repeatedly introduced legislation taking aim at the zinc coin with copper plating. Proposals over the years have attempted to temporarily suspend the penny's production, eliminate it from circulation, or require that prices be rounded to the nearest five cents, according to the Congressional Research Service.

Also Read: At Sabarimala temple, workers counting coins worth crores for last two months

Trump's new administration has been sharply focused on cutting costs, with Musk targeting entire agencies and large swaths of the federal workforce as he tries to identify a goal of $2 trillion in savings.

Finders, keepers: $62m a year

An estimate from a recycling and waste management company Covanta Holding Corp shows that Americans lose about $62 million a year by throwing coins into the trash.

The company says the coins are probably tossed away accidentally as they are swallowed by vacuum cleaners while cleaning car seats, sofas, couches, and other nooks and crannies.

Also Read: The Royal Mint begins production of the first circulating coins featuring King Charles III

Covanta recovers the coins from trash using powerful magnets and other equipment to pull metals out of garbage, and then makes money by selling the coins. However, the US Mint stopped buying back coins last year after it suspected some sellers of moving counterfeited coins.

The Transportation Security Administration in the US also benefits from lost pennies. It reportedly collected pennies worth more than half a million left behind by travellers in 2014, and uses the funds for its security operations if nobody claims the money.

One-rupee coin – no different

Back home in India, the story is not much different. An RTI request filed in 2018 revealed that the one-rupee coin cost Rs 1.11 to mint, more than its face value.

However, the other coins like Rs 2, Rs 5, and Rs 10 cost less than their face value to mint.

Also Watch: Tamil Nadu doctor buys car worth Rs 6 lakh using 10 rupee coins

There has been a decrease in the number of coins being minted every year. The production of one-rupee coins came down from 903 million coins minted in 2017 to 630 million coins in 2018.