In late 1775, Parliamentary leaders looked back over the preceding months and noted the total disintegration of the relationship between the mother country and the 13 American colonies Lexington, Concord, Bunker Hill, the seizure of Ticonderoga and an invasion of Canada then in progress were stark evidence of the rupture.
Retaliation came in the form of the American Prohibitory Act that was designed to strike at the economic viability of the errant colonies. The law first stated its rationale for action, noting the following:
the colonies were staging a rebellion against the authority of king and Parliament
they had raised an army and engaged his majesty's soldiers
they had illegally taken over the powers of government
they had stopped trade with the mother country.
Given those circumstances, Parliament felt compelled to prohibit all British trade with the American colonies. Further, all American ships and cargoes were to be treated as if they belonged to an enemy power and were subject to seizure; if adjudged a lawful prize by an admiralty court, the ships and cargoes were to be sold and the proceeds distributed among the capturing ships officers and crew.
This measure served as a declaration of economic warfare and did not go unnoticed in the colonies. Congress and the individual states reacted by issuing letters of marque, which authorized individual American ship owners to seize British ships in a practice known as privateering.