On April 27, 1773, the British Parliament passed the Tea Act, which allowed the struggling British East India Company to ship and sell tea directly to the American colonies. By shipping tea directly to America, the East India Company avoided the cost of paying tax in England and finding a middle-man to sell the tea in the colonies. The tea would, however, remain subject to the Townshend Duties (taxes Parliament placed on certain goods, such as tea, sold in the colonies). Nevertheless, East India Company tea would remain cheaper than it had before the Tea Act (as well as tea smuggled from the Netherlands).
Lord North assumed the colonists would not object to the Tea Act since it would reduce the price of tea. Of course, the colonists did not agree with him. They viewed the Tea Act as an attempt to legitimize Parliament's attempts to tax the colonies without representation.