The passing of the act, coupled with the maintenance of the three-pence American tea tax, suggested that Great Britain felt it had a right to tax the colonists and control the North American market. This early example of trade friction led to greater political and economic discord between the colonies and Britain.

The combination of a Taxation;coloniesColonies;taxationtea boycott, competition, and extensive tea smuggling in the American colonies brought the East India Company to the verge of bankruptcy. Great Britain;taxation of coloniesTo rescue the firm, Parliament passed the Tea Act. The law permitted the East India Company to ship tea directly to the colonies without paying duties in England and sell directly to colonial merchants, leaving out the middlemen. This cut the price of tea in America by half. The tax of three pence per pound of tea set by the Townshend Acts of 1767 remained in place.Tea Act of 1773

Many colonists initially thought the duties were eliminated altogether, and the merchants consigned to sell the tea did not enlighten the public. During the summer of 1773, however, as newspapers and pamphlets revealed the true purpose of the Tea Act, public outrage grew. Smugglers of cheaper Dutch tea, such as Boston merchant John Hancock, were particularly angered by the competition. Colonists from the Carolinas to Massachusetts became convinced that the purchase of cheaper, legally imported tea would give sanction to the British government’s right to tax the colonies. The Sons of Liberty in Philadelphia, New York, and Charleston intimidated American merchants into giving up their licenses to sell the tea. Only in Boston did the consignees refuse, thus setting the stage for the Boston Tea Party on December 16, 1773.

Boston Tea Party

Colonial economic systems

Parliamentary Charter of 1763

Revolutionary War

Taxation

Townshend Act