The Sugar Act was meant to be a replacement for the earlier Molasses Act. The Molasses Act had been passed by Parliament in an attempt to respond to complaints about trade between the British West Indies and the American Colonies. The Molasses produced by the British West Indies was more expensive than the imports from other European countries, and the West Indies had little use for the barter goods the colonists had to offer. A tax on imported molasses was meant to help raise the price of imported molasses, thereby making West Indies molasses more competitive. However, the Molasses Act place a high tax on imported molasses and provided insufficient enforcement to prevent smuggling or other work-arounds.
The British government needed to raise revenue after the French and Indian War. As it had gone into debt defending the American Colonies largely because of the colonists incursions into territory claimed by the French, the British Parliament determined that funds should be raised from the colonies. In fulfilling this goal, Parliament repealed the Molasses Act and replaced it with the Sugar Act, which was fundamentally the same, though it cut the tax in half and significantly increased enforcement.
The Sugar Act prevented the smuggling and other endeavors that had made the Molasses Act ineffective. In doing so, it hindered the rum industry in New England by increasing the costs of production. It also limited the flow of hard currency into the colonies because much of the money was sent back to the West Indies as payments. This undermined colonial currency.
These impacts, combined with a post-war recession, led to protests, boycotts, and sporadic riots, though not of the scale seen after the passage of the Stamp Act.
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