The naval blockade of the United States began informally in the late fall of 1812. Under the command of British Admiral John Borlase Warren, it extended from South Carolina to Florida.^[15] It expanded to cut off more ports as the war progressed. Twenty ships were on station in 1812 and 135 were in place by the end of the conflict. In March 1813, the Royal Navy punished the Southern states, who were most vocal about annexing British North America, by blockading Charleston, Port Royal, Savannah, and New York City as well. Additional ships were sent to North America in 1813 and the Royal Navy tightened and extended the blockade, first to the coast south of Narragansett by November 1813 and to the entire American coast on 31 May 1814.^[16] In May 1814, following the abdication of Napoleon and the end of the supply problems with Wellington's army, New England was blockaded.^[17]

The British needed American foodstuffs for their army in Spain and benefited from trade with New England, so they did not at first blockade New England.^[16] The Delaware River and Chesapeake Bay were declared in a state of blockade on 26 December 1812. Illicit trade was carried on by collusive captures arranged between American traders and British officers. American ships were fraudulently transferred to neutral flags. Eventually, the United States government was driven to issue orders to stop illicit trading. This put only a further strain on the commerce of the country. The British fleet occupied the Chesapeake Bay and attacked and destroyed numerous docks and harbours.^[18] The effect was that no foreign goods could enter the United States on ships and only smaller fast boats could attempt to get out. The cost of shipping became very expensive as a result.^[19]

The blockade of American ports later tightened to the extent that most American merchant ships and naval vessels were confined to port. The American frigates USS United States and USS Macedonian ended the war blockaded and hulked in New London, Connecticut.^[20] USS United States and USS Macedonian attempted to set sail to raid British shipping in the Caribbean, but were forced to turn back when confronted with a British squadron, and by the end of the war, the United States had six frigates and four ships-of-the-line sitting in port.^[21] Some merchant ships were based in Europe or Asia and continued operations. Others, mainly from New England, were issued licences to trade by Admiral Warren, commander in chief on the American station in 1813. This allowed Wellington's army in Spain to receive American goods and to maintain the New Englanders' opposition to the war. The blockade nevertheless decreased American exports from $130 million in 1807 to $7 million in 1814. Most exports were goods that ironically went to supply their enemies in Britain or the British colonies.^[22] The blockade had a devastating effect on the American economy with the value of American exports and imports falling from $114 million in 1811 down to $20 million by 1814 while the United States Customs took in $13 million in 1811 and $6 million in 1814, even though the Congress had voted to double the rates.^[23] The British blockade further damaged the American economy by forcing merchants to abandon the cheap and fast coastal trade to the slow and more expensive inland roads.^[24] In 1814, only 1 out of 14 American merchantmen risked leaving port as it was likely that any ship leaving port would be seized.^[25]