The declining circulation of U.S. coins is creating a 'small change crisis' at retail points, hitting the textile and apparel industry hard, especially in wholesale markets, small factories, and pop-up stores. Public data shows that in 2023, U.S. Mint coin production dropped by about 30% year-on-year, while the velocity of coin circulation slowed by 15%. This means every cash transaction now faces a higher risk of change shortage.
Breaking Points in the Settlement Chain
The coin shortage directly reduces transaction efficiency. In the textile industry, cash transactions still account for over 20% of wholesale activities, particularly in fabric wholesale markets in New York and Los Angeles, where small merchants and independent designers frequently use cash. When change is insufficient, sellers either accept higher denomination bills (increasing counterfeit risk) or voluntarily waive small amounts—effectively offering discounts that compress already thin margins.
More profoundly, this friction is altering purchasing habits. Some small factories now require customers to use electronic payments or place orders in round amounts to avoid change issues. This raises the barrier for small-batch purchases, pressuring startups and independent designers. Industry surveys indicate that in Q1 2024, the number of small cash orders in U.S. fabric wholesale markets fell by 12% year-on-year.
Policy Debate and Industry Response
Facing the accelerating decline in coin circulation, retail coalitions are lobbying Congress to pass the Cash Settlement Standardization Act, which would allow merchants to round coin amounts in cash transactions uniformly (e.g., 1-2 cents down, 3-4 cents up to 5 cents). If passed, the bill would directly rewrite cash settlement rules in U.S. retail.
The textile industry is divided. Large chain apparel brands and e-commerce platforms, with high electronic payment adoption, are less affected. However, specialty markets, trade show booths, and community clothing stores are highly concerned. The American Apparel & Footwear Association (AAFA) publicly supports the bill, arguing standardization reduces transaction disputes and operational costs. Yet, some consumer advocacy groups oppose it, claiming rounding is a hidden fee that could cost consumers hundreds of millions annually.
Transmission Effects on Chinese Textile Exports
While the coin shortage seems a domestic U.S. issue, it cascades to Chinese textile exporters through the supply chain. First, U.S. buyers, facing higher settlement costs, may prefer suppliers that accept electronic payments or round orders, pushing Chinese exporters to upgrade digital settlement capabilities. Second, changes in U.S. wholesale purchasing habits may reduce small-batch, high-frequency orders, favoring larger batches with fewer transactions.
China Customs data shows that from January to April 2024, China's textile and apparel exports to the U.S. grew 8% in fabric categories, but unit prices fell 3%. This aligns with U.S. buyers compressing per-transaction costs and shifting to bulk orders with downward price pressure. Exporters should beware that coin shortage-induced settlement friction may further squeeze order margins.