In 1807, France and Britain were enmeshed in the Napoleonic Wars that had begun in 1803. The United States remained neutral, and American merchants continued trade with both countries. As the war continued, naval commanders from France and Britain began making excuses to seize neutral ships whose crews they suspected of having dealings with their enemy. English crews also seized American ships and kidnapped sailors accused of being wayward British citizens, then pressed those sailors into service on British ships. In response to these incursions, the U.S. Congress, with the support of President Thomas Jefferson, passed the Embargo Act in December, 1807.

Effects of the Embargo Act

The Embargo Act prevented all vessels from leaving U.S. ports with goods destined for foreign ports. As a result of these trade restrictions, U.S. shipping companies lost business. Farmers and merchants were unable to sell their overabundant goods overseas, causing prices to drop. The Embargo Act led to an increase in unemployment and an increase in smuggling, though it also led to the American production of some goods formerly imported from Britain.

Meanwhile, Britain had access to a steady supply of commodities from Latin America and elsewhere, so the embargo had little effect on them. In March 1809 Congress rescinded the unpopular embargo and replaced it with the Non-Intercourse Act which allowed maritime trade to resume with all countries except France and Britain.