Economists Criticize Trump’s "Penny-Wise But Pound-Foolish" Plan

President Donald Trump’s directive to halt penny production, citing the cost of manufacturing, is facing strong opposition from economists and advocacy groups like Americans for Common Cents (ACC), Chad de Guzman reported for Time Magazine.

Polling suggests that most Americans favor keeping the penny in circulation.

Not everyone supports eliminating the penny.

Mark Weller, executive director of the pro-penny group ACC, responded to DOGE on Jan. 23, arguing that the government “won’t save money if the penny is eliminated” and that such a move would actually “have a massive negative impact on the U.S. Mint’s cost structure.”

ACC contends that eliminating the penny would require increased production of nickels to compensate for small-value transactions. However, nickels suffer from a similar “seigniorage” problem: the 2024 U.S. Mint report revealed that each five-cent coin costs 13.78 cents to manufacture.

Polling suggests that most Americans favor keeping the penny in circulation. Additionally, economists warn that eliminating the penny could disproportionately affect lower-income individuals.

Retired Pennsylvania State University professor Raymond Lombra, a former senior economist at the Federal Reserve Board, has argued that the so-called “rounding tax” resulting from the penny’s removal would be regressive.

Since low-income individuals rely more on cash transactions, rounding up prices could unfairly burden them.

A 2017 study by a Canadian economics student found that, after Canada stopped minting one-cent coins in 2012, rounding practices transferred an estimated CAD $3.27 million per year from consumers to grocery stores, João da Silva reported for BBC News.

Meanwhile, Gloria Oladipo of The Guardian and Betsy Klein of CNN reported that Trump may lack the authority to halt penny production unilaterally.