The U.S. is considering getting rid of the penny, following in Canada’s footsteps. With production costs exceeding its face value, President Trump has called for halting new one-cent coin production. But what happens when a country ditches its lowest-value coin? Canada did it over a decade ago—here’s what the U.S. might learn from their experience.
Why the U.S. Might Ditch the Penny
The U.S. Mint reports that making a single penny costs about 3.69 cents—over three times its actual worth. This has been the case for 19 consecutive years, making the penny an ongoing financial loss. Trump’s recent push to end its production suggests the government is looking for cost-saving measures.
Has the U.S. Eliminated Coins Before?
Yes. In 1857, the U.S. discontinued the half-cent coin, which had lost its usefulness. If the penny follows the same path, it wouldn’t be an unprecedented move.
Canada’s Penny Phase-Out: A Case Study
In the early 2010s, Canada scrapped its penny due to similar concerns about production costs. The Canadian government worked with financial institutions and charities to collect and remove pennies from circulation.
The Process:
- Collection & Sorting – Canadians turned in their pennies at banks and collection centers.
- Metal Separation – Older pennies, which contained copper, were sorted separately from newer zinc and steel ones.
- Melting & Recycling – The extracted metals were sold, generating about $42.5 million CAD.
Impact on Everyday Transactions
Without pennies, Canada now rounds cash transactions to the nearest nickel. Electronic transactions, like card or check payments, remain unaffected. Other countries like Australia, Norway, and the UK have taken similar steps without major economic disruptions.
Would U.S. Pennies Become Valuable?
Despite initial speculation, Canadian pennies didn’t skyrocket in value after their discontinuation. Most remained worth their face value, with some fetching only a slight premium.
Could the U.S. Face Challenges?
- Zinc Lobbyists – Since pennies are mostly made of zinc, industry groups may resist the change.
- Public Resistance – People are accustomed to pennies, and phasing them out could cause short-term confusion.
- Business Adjustments – Stores would need to adapt rounding policies for cash transactions.
Potential Benefits of Ending Penny Production
A Federal Reserve report suggested that cutting penny production could save up to $100 million per year. While this is a small fraction of the government’s budget, it still represents a meaningful reduction in unnecessary costs.
Conclusion
If the U.S. follows Canada’s example and stops minting pennies, it could save millions annually. However, strong resistance from industries and consumers might slow the process. One thing is clear—if the penny does go away, history suggests it won’t suddenly become a collector’s item.