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The effectiveness of any boycott comes down to money--how much does it cost the person/group/business being boycotted? In the case of the American colonies, the English government had spent a considerable amount of money on their defense during the French and Indian War. Taxes levied by Parliament after that war were intended to offset the costs, and most Englishmen, as well as many colonists, were of the opinion that it was perfectly reasonable to tax the colonies to pay for their own defense. However, as tensions between England and the colonies increased in the years before the Revolution, the American colonies resorted to the only real recourse they had short of declaring war--boycotting British trade goods. These boycotts served to increase tensions between Britain and her colonies, not to mention having a negative impact on the revenue so desperately needed in the British coffers. The increased tension contributed to more than a few violent incidents in the colonies, especially in the Boston area, where the Boston Massacre, the Boston Tea Party, and the shots fired at Lexington and Concord soon put the colonists on a road from which there was no turning back.
Refusing to trade may hurt you, but if you've got nothing to lose, it may convince the other party to change their ways if they're suddenly losing lots of money. Charles Boycott (1832-1897) was an Irish landlord whose rent practices caused tenants to refuse to work on his farms. The workers went further, destroying his property and equipment, burning him in effigy, and socially isolating ("shunning") him and all that might to business with him. "To boycott" now means to apply these actions towards a given business or individual. Although the term did not exist at the time of the American Revolution, these were the same practices colonists exercised to convey their displeasure over Parliament's governance. In 1765, the Royal Lieutenant Governor in Boston, Thomas Hutchinson (descended from Anne Hutchinson) along with other tax agents had their homes ransacked, were beaten, and burned in effigy. In 1767, after the passage of the Townsend Acts, which taxed a variety of British manufactured goods, merchants along the Atlantic coast organized a boycott of all British goods. In addition to hurting British merchants, it stimulated manufacturing within the colonies. The boycott caused huge losses to British merchants; the duties imposed by the Townsend Acts, if they could even be collected, wouldn't have offset the deficit. Parliament, pressured by the merchants, was forced to alter course and repealed the Acts, excepting the tax on tea, which lead to the "boycotting" of that item in Boston on December 16, 1773.
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