Australian and Chinese authorities have broken an international syndicate smuggling illegal tobacco into Australia, with more than 60 arrests in China and over $92 million in evaded duty seized at Australian ports. The significance is less the size of the haul than where the enforcement happened: increasingly, before the containers ever arrive.
The operation
Acting on intelligence from China’s Anti-Smuggling Bureau, Australian Border Force officers were notified of 112 containers suspected of carrying illicit tobacco between January and May. Of those, 91 were found to contain more than 60 million cigarettes and 60 kilograms of loose leaf tobacco, with evaded duty put at over $92 million. The work ran under two investigations, Project Seahorse and Operation Trailblazer.
Chinese authorities traced the product as likely manufactured in South East Asia, moved to Shanghai, and concealed in shipments declared as goods such as printers and LED lamps, most of it bound for Sydney. More than 60 people were arrested in China over their involvement.
The pipeline behind it is bigger again. Since July 2025, intelligence shared by Chinese customs has led to seizures of 89 million cigarettes, 11 tonnes of loose leaf tobacco and around a million vapes at the Australian border.
The pre-border shift
ABF Assistant Commissioner Penelope Spies called the disruption one of the most significant to come from internationally shared intelligence, and Assistant Minister for Customs Julian Hill described the strategy plainly: pre-border with international partners, at the border with record seizures, and post border by closing illegal shops. The Commonwealth paid $98 million last financial year to help states and territories with that last layer.
Officials from both agencies met this week to map illicit supply chains, suggesting the China channel is becoming a standing arrangement rather than a one-off.
The argument the seizure landed in
The bust arrived mid-argument. One Nation has proposed cutting the excise by 75 per cent, and NSW Premier Chris Minns backed a rethink this week, calling the excise “a source of funding and opportunity for organised crime”. Social Services Minister Tanya Plibersek’s response was blunt: Minns is “absolutely 100 per cent wrong”, and the states should do a better job policing illegal sales.
The excise reached approximately $1.55 per cigarette this month, around $30 on a pack of 20. Economist Chris Richardson estimates that had the black market not grown as it has since 2019, tax revenue would be around $15 billion a year higher, with organised crime taking an estimated $6 billion to $7 billion of that.
Hill’s counter to the excise-cut push is worth noting for what it concedes: even if the excise were wiped out entirely, illegal cigarettes would still be cheaper. Both sides of the argument now agree the price gap cannot be closed by tax policy alone. The disagreement is over what that proves.
A note for independent operators
Enforcement wins offshore do not change conditions on the driveway this month, but the direction matters: the more product intercepted before the border, the less lands in the shops undercutting licensed retailers. In the meantime the compliance burden sits with legal sellers, so licensing, supplier documentation and staff procedures need to hold up to inspection, and any approach to stock cheap unbranded product should be treated as the risk it is.