British Parliament passed the Tea Act in 1773 in order to save the East India Company from bankruptcy. By severely lowering the tax on tea, the legislation allowed the East India Company a monopoly on tea sales in the American colonies.
While the East India Company held a monopoly in most of the British Empire, it struggled in the colonies because colonial merchants sold illegally smuggled tea from competitors, such as the Dutch. British Prime Minister Frederick North initiated the Tea Act under the assumption that colonists would welcome cheap prices on legal tea. Instead, many Americans viewed it as an act of tyranny.
Though the Tea Act imposed no new taxes, the colonists opposed it because the duty tax on tea entering the colonies remained in place, while the tax on tea entering England was removed. The act was also designed to put illegal merchants out of business, because the East India Company was able to sell its product for considerably less money.
As a result of this legislation, colonialist Samuel Adams and around 60 members of the radical group Sons of Liberty organized the Boston Tea Party. On Dec. 16, 1773, they boarded three British ships carrying East India tea. The cargo was unloaded into the Boston Harbor. This caused Britain to implement the Coercive Acts in 1774, which closed Boston to shipping and established British military control in Massachusetts.