In 1803, war broke out between Great Britain and France. American ships seized the opportunities for commerce presented by the war. The British, however, soon imposed a blockade on French ports and began seizing American ships. To make matters worse, the British began impressing American sailors and even passengers from American ships. Since they did not recognize the rights of any British subject to emigrate, they considered American sailors to be British subjects. Between 4,000 and 10,000 sailors were forcibly taken into the British Navy in this manner.

Between the years 1803 and 1807, the British seized 500 American ships; while 300 ships were seized by the French. In describing the actions of the British and French, President Jefferson stated: "the one is a den of pirates, the other a den of robbers."

While the seizure of the "Chesapeake" was the worst of the British direct actions, Britain's decision to close off all trade with Continental Europe was a further violation of what Americans perceived as the rights of their neutrality.

The British actions outraged Americans. There were immediate demands for war. Jefferson, however, wished to avoid war at all costs. He believed that the US' goals could be met by commercial actions. Furthermore, Jefferson was obsessed with the idea of a fleet of gunboats to protect American cities, in light of the perceived failings of the Navy in the "Chesapeake" Affair. His plan to build gunboats at the expense of ocean-going ships received a ready reception in Congress.

Jefferson decided to impose an embargo on both belligerents, assuming both Britain and France needed US trade so much that they would agree to observe American neutrality.

Unfortunately, Jefferson miscalculated. The only result of the embargo was a crippling of all American trade. New England's trade was hit the hardest.