WASHINGTON — The U.S. Treasury is phasing out production of the penny and will soon stop putting new one-cent coins into circulation, the department said in a statement Thursday.
The news of the decision was first reported by the Wall Street Journal.
A Treasury spokesperson said the government made its final order of penny blanks this month, and the United States Mint will continue to manufacture pennies only as long as an inventory of penny blanks exists. Consumers with pennies will still be able to use them for purchases. But without new pennies moving into circulation, businesses that complete cash transactions will have to start rounding up or down to the nearest nickel.
The move is not a surprise. The production of a penny costs more than the value of the coin. President Donald Trump said in February that he ordered the U.S. Mint to stop making pennies, citing the cost.
“For far too long the United States has minted pennies which literally cost us more than 2 cents. This is so wasteful! 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 said in a post to social media as he returned to Washington from the Super Bowl in February.
Trump actually undersold the cost argument — pennies cost more than three cents each to produce.
But the cost of a penny might be a smaller problem than the alternative. That’s because the Mint actually loses even more money on each nickel it produces. Each nickel costs 13.8 cents, with 11 cents of production costs and 2.8 cents of administrative and distribution costs. These figures are for the government’s most recent fiscal year, which ended in September.