Smuggling!

Just how much smuggling was there in the colonies? Given that smuggling was illegal, it's difficult to say exactly. But there are clues: Boston had 63 distilleries, 1754-55, that needed 40,000 hogsheads of molasses/year to run. Customs counted 384 hogsheads as having arrived during that time. In 1764, Rhode Island’s assembly tells Parliament that Rhode Island buys 120K pounds sterling of British exports/year, makes only 5k in legit exports, illegal molasses making up the balance; NY says the imbalance between the two is 470K pounds sterling. One estimate is that Americans imported 700,000 pounds/year of illegal goods.

This poses a problem for England. There is little precedent for smuggling enforcement: of the 36 seizures brought to trial in New England, 1680-1682, 34 of them result in acquittals.
1700-60: “golden age of illicit trade in the American colonies”
1710: 37 customs officers in colonies, and colonial population 332K
1760: colonial population explodes to 1.6 million, but there are only 50 customs officers

Even worse, enforcement is “typically lethargic”—“bribing trumped bullying, producing a win-win situation for the smuggler and the customs agent—even if not for imperial coffers”; many royal customs collectors rent out their positions. Mass. Governor Francis Bernard, 1764: “there never was, I believe, an uncorrupt customs officer in America." Customs enforcement brings in less than 2000 pounds/year and costs more than 8000 pounds/year. The Molasses Act was a “dead letter” from the start, constituting a “de facto invitation to smuggle” because it was so poorly enforced; you could even buy insurance against possible loss of smuggled goods.
British imports into colonies grow 600%, 1700-70, paid for by smuggling: “the breaking of British trade laws made it possible for the colonists to afford to live like the British.”

There is particularly heavy smuggling during 7 Years War: many US ships put in at port of San Fernando de Monte Cristi on N coast of Hispaniola, which is right next to French territory.

One British warship finds that 2/1759, 28 of 29 ships in harbor are from colonies; 5/61, 36 of 50 were; British Board of Trade reports by end of 1759 that more than 150 colonist ships have been identified there.

8/23/1760, William Pitt, British PM, orders provincial governors to “make the strictest Enquiry into the State of this dangerous and ignominious Trade."

1771: Massachusetts Governor Thomas Hutchinson estimates that 80% of the tea consumed in Boston is smuggled.

So the measures the British took during the 1760s had their genesis during the 7 Years War, as did their recognition that the problem did not have an easy solution.