A Hotbed of Smuggling! How Does Mexican Customs Crack Down on Mobile Phones via “Gray Channels”?

In the global landscape of mobile phone trade, Mexico is not only a high-profile destination for industrial relocation but also a troublesome “hotbed” of mobile phone smuggling. With the continuous growth of demand in the mobile phone market and the existence of issues such as high tariffs and complex customs clearance in formal import processes, a large number of mobile phones have illegally flooded into the Mexican market through “gray channels”. This not only impacts the local formal mobile phone industry and causes huge tax losses but also brings a series of hidden risks, including product quality and safety hazards and intellectual property infringement. Faced with the severe smuggling situation, Mexican Customs has significantly intensified its crackdown efforts in recent years, rolling out a number of targeted measures to engage in an intense battle against these “gray channels”. So, what forms do these “gray channels” for mobile phone smuggling in Mexico take? What specific actions has Customs taken? And what challenges does it face in the crackdown?

I. The Rampage of “Gray Channels”: Main Forms and Harms of Mobile Phone Smuggling in Mexico

1. Diverse Smuggling Methods via “Gray Channels”

The “gray channels” for mobile phone smuggling in Mexico are diverse and constantly evolving as Customs enhances its supervision measures. Among them, “ant-like smuggling” (smuggling in small batches by multiple individuals) is one of the most common methods. Smugglers exploit the duty exemption policy for personal items, organizing a large number of “mules” to transport mobile phones into Mexico in batches from neighboring countries such as the United States and Guatemala. These “mules” usually disassemble the mobile phone packaging, remove outer boxes and labels, and disguise the phones as personal items to evade Customs inspections. In cities like Tijuana and Juárez on the U.S.-Mexico border, hundreds of “mules” shuttle through border crossings every day, each carrying 2-3 mobile phones. The total number of smuggled phones accumulated in this way is extremely staggering.

“Underreporting or concealing information” in cross-border e-commerce is also a major “gray channel”. To reduce costs and evade tariffs, some cross-border e-commerce platforms or sellers intentionally underreport the quantity, model, or value of imported mobile phones when making declarations. They may declare high-value phones as low-value products, or even brand-new phones as second-hand ones or accessories. For instance, a cross-border e-commerce enterprise once underreported the declared value of each high-end smartphone imported into Mexico from \(500 to \)100, involving tax evasion of hundreds of thousands of dollars in a single shipment. Additionally, some enterprises forge trade documents and fabricate information such as the origin and purpose of mobile phones to fraudulently obtain tariff preferences or evade supervision.

Smuggling through “bonded zone arbitrage” is even more covert. Mexico has established multiple bonded zones, where enterprises are allowed to store, process, and transship goods without paying tariffs until the goods actually enter the Mexican domestic market. Taking advantage of this policy loophole, some illegal enterprises transport imported mobile phones into bonded zones but, instead of processing or transshipping them as required, secretly move the phones out of the zones and into the domestic market for sale by forging outbound documents or replacing cargo labels—all to avoid paying tariffs.

2. Multiple Harms Caused by Mobile Phone Smuggling

The massive influx of smuggled mobile phones through “gray channels” has brought severe negative impacts to Mexico. Firstly, it has resulted in huge tax losses. Mexico imposes a 16% value-added tax (VAT) and a maximum tariff of 20% on imported mobile phones, but smuggled phones completely evade these taxes and duties. According to statistics from Mexico’s Ministry of Finance, in 2024 alone, tax losses caused by mobile phone smuggling exceeded $1.2 billion—funds that could have been used for infrastructure development, public service improvements, and other areas, but were wasted due to smuggling.

Secondly, it has severely disrupted the local formal mobile phone industry and market order. With the advantage of avoiding tariffs and low costs, smuggled mobile phones are sold at much lower prices than those through formal channels, squeezing the living space of legitimate mobile phone brands. Many local mobile phone distributors and agents have faced declining performance, losses, or even bankruptcy as they cannot compete with smuggled phones. Meanwhile, the chaos in the smuggled mobile phone market has led to the collapse of price systems, making it difficult for consumers to distinguish between genuine and fake products or assess quality, significantly eroding market trust.

More seriously, most smuggled mobile phones lack effective quality inspections and after-sales support, posing significant safety risks. These phones may not have passed Mexico’s official quality and safety certifications, with issues in battery life, charging safety, and signal stability—making them prone to safety accidents such as fires and explosions. In the second half of 2024, Mexico City, the capital of Mexico, witnessed multiple fire accidents caused by charging smuggled mobile phones, resulting in 2 injuries and property damage. Furthermore, a large number of smuggled mobile phones involve intellectual property infringement; many are “knockoffs” imitating well-known brands like Apple and Samsung. This not only infringes on the legitimate rights and interests of brand owners but also misleads consumers and undermines the market environment for intellectual property protection.

II. On High Alert: Specific Measures by Mexican Customs to Crack Down on Mobile Phones via “Gray Channels”

1. Strengthening Border Supervision: Building the “First Line of Defense”

The border is the “first line of defense” against mobile phone smuggling. Mexican Customs has continuously enhanced inspection efforts at border crossings and adopted advanced technological means to improve supervision efficiency. At key ports on the U.S.-Mexico border, such as San Ysidro and El Paso, Customs has installed additional high-definition X-ray inspection equipment and intelligent inspection systems, which can quickly identify mobile phones and related accessories in cargo. These devices can not only penetrate cargo packaging to clearly show the quantity and model of mobile phones but also use data analysis to identify characteristics of suspected smuggled goods—such as large quantities of small electronic products of the same specification or abnormal packaging methods—greatly improving the accuracy and efficiency of inspections.

At the same time, Mexican Customs has stepped up efforts to crack down on “mules”. Through big data analysis and intelligence gathering, Customs has established a “mule” blacklist system to focus on monitoring individuals who frequently cross the border and are suspected of carrying smuggled mobile phones. Once a “mule” is found carrying more mobile phones than the reasonable limit for personal use, Customs will seize the phones in accordance with the law and impose penalties such as fines or detention on the individuals involved. In 2024, Mexican Customs seized over 120,000 mobile phones smuggled by “mules” at the U.S.-Mexico border and arrested more than 3,000 suspects, effectively curbing the spread of “ant-like smuggling”.

Furthermore, Mexico has established cross-border law enforcement cooperation mechanisms with Customs authorities of neighboring countries such as the United States and Guatemala to conduct joint law enforcement operations. Through information sharing, joint patrols, and synchronized crackdowns, they work together to combat cross-border mobile phone smuggling rings. For example, in early 2025, Mexican Customs and U.S. Customs launched a one-month joint law enforcement operation at the Tijuana-San Diego border, seizing over 8,000 smuggled mobile phones and dismantling a cross-border mobile phone smuggling network that had long been active on the U.S.-Mexico border. This network was suspected of smuggling second-hand mobile phones from the U.S. market to Mexico for sale, involving an amount of over $5 million.

2. Regulating Cross-Border E-Commerce Supervision: Closing Loopholes in “Underreporting”

To address the issue of “underreporting or concealing information” in cross-border e-commerce smuggling, Mexican Customs has introduced a number of targeted supervision measures. In 2024, Mexican Customs released the “Regulations on Supervision of Cross-Border E-Commerce Import Goods”, requiring cross-border e-commerce platforms and sellers to truthfully declare information such as the quantity, model, and value of imported mobile phones, and provide complete transaction certificates and product certification documents. Meanwhile, Customs has established a database for cross-border e-commerce imported goods, comparing the declaration information from platforms with Customs inspection data and product information provided by brand owners. If any discrepancy is found between the declared information and the actual situation, Customs will immediately suspend customs clearance of the goods and initiate an investigation.

To improve the authenticity of declaration information, Mexican Customs has also introduced a “platform joint liability” system. This system stipulates that cross-border e-commerce platforms are responsible for supervising the import declaration behavior of sellers on their platforms. If a seller on the platform engages in “underreporting or concealing information” smuggling and the platform fails to fulfill its supervision obligations, Customs will impose a fine of up to $1 million on the platform and suspend its qualification for cross-border e-commerce import business. The implementation of this system has prompted international cross-border e-commerce platforms such as Amazon and Shopee to strengthen the review and management of settled sellers, proactively remove product information suspected of smuggling, and assist Customs in investigating non-compliant sellers.

In addition, Mexican Customs has established a cooperation mechanism with major mobile phone brand owners. Brand owners provide Customs with up-to-date data such as mobile phone product information, anti-counterfeiting marks, and price ranges, helping Customs quickly identify smuggled mobile phones involved in “underreporting or concealing information” during inspections. For example, Apple has provided Mexican Customs with a database of International Mobile Equipment Identity (IMEI) codes and official price lists for each iPhone model. By scanning the IMEI code of a mobile phone, Customs can quickly check the true model and official guide price of the phone, thereby determining whether there is an abnormality in the declared value. In 2024, relying on information provided by brand owners, Mexican Customs handled over 300 cross-border e-commerce smuggling cases involving “underreporting or concealing information” and seized more than 50,000 smuggled mobile phones.

3. Enhancing Bonded Zone Supervision: Solving the Problem of “Arbitrage” Smuggling

To address smuggling through “bonded zone arbitrage”, Mexican Customs has comprehensively optimized the management process of bonded zones and strengthened the whole-process supervision of goods in bonded zones. Firstly, Customs requires enterprises in bonded zones to establish a complete account system for inbound and outbound goods, recording detailed information such as the name, quantity, specification, origin, and destination of goods, and uploading this information to the Customs supervision system in real time. Customs can access and verify the dynamic status of goods through the system at any time. Enterprises that fail to establish accounts as required or keep untrue account records will be fined and ordered to rectify within a time limit; those that fail to rectify will have their qualification to operate in the bonded zone revoked.

Secondly, Mexican Customs has increased inspection efforts on goods leaving bonded zones. Special inspection points have been set up at the outbound channels of bonded zones to conduct random or targeted inspections on outbound goods. For mobile phones declared as “processed for export”, Customs will verify documents such as the production orders and export contracts of processing enterprises to ensure that the goods are indeed used for export after processing, rather than flowing into the domestic market. At the same time, Customs will inspect the labels and packaging of outbound goods to prevent enterprises from disguising bonded zone goods as ordinary goods for shipment by replacing labels or forging packaging.

To prevent enterprises in bonded zones from colluding with external personnel for smuggling, Mexican Customs has also strengthened the management of personnel and vehicles entering and exiting bonded zones. All personnel entering bonded zones must hold passes issued by Customs and undergo identity verification and security checks; vehicles entering bonded zones must be registered, and their travel routes and cargo loading/unloading processes are monitored throughout. In the first quarter of 2025, Mexican Customs seized 23,000 mobile phones smuggled through “bonded zone arbitrage” and penalized 15 non-compliant enterprises, effectively deterring smuggling activities in bonded zones.

III. Challenges and Dilemmas: Obstacles to Mexican Customs’ Crackdown on “Gray Channels”

1. The Contradiction Between Upgraded Smuggling Methods and Insufficient Law Enforcement Resources

Although Mexican Customs has continuously strengthened supervision, smugglers have also upgraded their methods, showing characteristics of professionalism, concealment, and intelligence. Some large smuggling rings use advanced communication equipment and encrypted software to communicate, formulate detailed smuggling plans, and even hire professional lawyers and logistics personnel to evade supervision. For example, a smuggling ring used drones to transport mobile phones from border areas in the United States to remote locations in Mexico, where ground personnel then received and distributed the phones. The entire process did not require personnel to cross the border, significantly increasing the difficulty for Customs to detect and investigate.

In contrast, Mexican Customs has relatively insufficient law enforcement resources. On the one hand, the number of Customs personnel is limited and unevenly distributed. In some remote border areas and small ports, there is a severe shortage of Customs personnel, making it difficult to implement 24/7 comprehensive supervision. For instance, at some mountainous ports on the Mexico-Guatemala border, due to their remote location and poor transportation, Customs can only conduct intermittent inspections during the day, leaving loopholes for smugglers. On the other hand, the law enforcement equipment of Customs needs to be updated. Some grassroots Customs offices still use outdated inspection equipment, which has low detection accuracy and efficiency, making it difficult to cope with increasingly concealed smuggling methods.

2. Interference from Corruption and Local Protectionism

Corruption is another major challenge faced by Mexican Customs in its crackdown on “gray channels”. Tempted by money from smuggling rings, some Customs personnel abuse their positions to provide “conveniences” for smuggled mobile phones, such as leaking inspection information in advance, helping smuggled goods pass through Customs quickly, or forging inspection records. In 2024, the General Administration of Mexican Customs uncovered a major corruption case involving more than 10 Customs officials. These officials had long provided protection for a smuggling ring, helping it smuggle hundreds of thousands of mobile phones into the Mexican market, involving an amount of over $200 million. Although the Mexican government has launched anti-corruption campaigns on multiple occasions, corruption is deeply rooted and cannot be eradicated in the short term.

Local protectionism has also caused certain interference in Customs’ crackdown efforts. In some regions, mobile phone smuggling has formed a complete industrial chain covering transportation, warehousing, and sales, driving local employment to a certain extent. To maintain local economic stability and employment, some local governments adopt a permissive or even conniving attitude towards smuggling, fail to cooperate with Customs’ law enforcement operations, and even provide shelter for smuggling enterprises. For example, in a city in southeastern Mexico, the local government not only failed to assist Customs in investigating the smuggled mobile phone market but also offered tax incentives to smuggling enterprises, turning the region into a “safe haven” for mobile phone smuggling.

3. Complex International Trade Environment and Policy Coordination Issues

Mexico’s complex international trade environment also poses challenges to Customs’ crackdown on “gray channels”. Mexico has signed free trade agreements with multiple countries, and there are differences in tariff policies and rules of origin under different agreements. This creates opportunities for smugglers to exploit policy loopholes for “rule arbitrage”. For example, smugglers transport mobile phones imported from China to the United States first, conduct simple processing there, and then export them to Mexico under the name of “Made in the USA”—taking advantage of the tariff preferences under the USMCA (United States-Mexico-Canada Agreement) to evade high tariffs. However, when Customs verifies the origin of the goods, it needs to obtain a large number of trade documents and production records, which involves a cumbersome process and takes a long time—leaving room for smugglers to operate.

Furthermore, insufficient coordination between relevant domestic policies in Mexico has also affected the effectiveness of the crackdown. For example, there is a lack of effective coordination between Customs’ supervision measures and the policies of tax authorities and market supervision departments. After seizing smuggled mobile phones, Customs needs to transfer the cases to tax authorities for tax recovery and to market supervision departments for market cleanup. However, due to delayed information sharing and inconsistent law enforcement standards between departments, the case handling cycle is prolonged. Some smuggled mobile phones even re-enter the market during the case handling process, undermining the crackdown effect.

IV. Future Outlook: Continuously Improving the Supervision System to Eradicate “Gray Channels”

1. Increasing Technological Investment to Enhance Intelligent Supervision

In the future, Mexican Customs should further increase technological investment to upgrade supervision methods towards intelligence and informatization. On the one hand, it should continue to promote the application of advanced technologies such as high-definition X-ray inspection, drone patrols, big data analysis, and artificial intelligence (AI) recognition to build an “air-ground integrated” three-dimensional supervision network. For example, using drones for regular patrols in remote border areas to detect smuggling activities in a timely manner; integrating multi-dimensional data such as border clearance data, cross-border e-commerce transaction data, and mobile phone brand owner data through big data analysis to establish a smuggling risk early warning model and identify high-risk smuggling behaviors in advance. On the other hand, it should strengthen the construction of Customs information systems to achieve real-time information sharing with tax authorities, market supervision departments, and Customs of neighboring countries, breaking down information barriers and improving the efficiency of collaborative supervision.

2. Deepening Anti-Corruption Reforms and Strengthening Law Enforcement Team Building

To address corruption, the Mexican government needs to further deepen anti-corruption reforms and establish stricter supervision and restraint mechanisms. It should strengthen daily supervision and assessment of Customs personnel, establish integrity files, and severely investigate and punish personnel suspected of corruption in accordance with the law—showing no mercy. At the same time, it should improve the salary and occupational security of Customs personnel to reduce the conditions for corruption to breed. In addition, it should strengthen the building of the law enforcement team, improving the professional quality and law enforcement capabilities of Customs personnel through regular training and skill assessments, and building an honest, efficient, and professional Customs law enforcement team.

3. Optimizing the Policy System and Strengthening International and Domestic Coordination

At the policy level, Mexico needs to further optimize its international trade policies and domestic supervision policies to reduce the policy space for