In South America, Spain captured the Portuguese port of Colonia del Sacramento, now in Uruguay and much of the modern-day Brazilian state of Rio Grande do Sul.

Portuguese encroachments in the Río de la Plata allowed their merchants to evade these commercial restrictions; Buenos Aires subsequently become a major center for smuggled goods.

A Boundary Commission was established to delineate colonial borders between the Portuguese and Spanish Empires, which were later confirmed by the 1778 Treaty of El Pardo Portugal agreed to prevent the smuggling of goods and deny the use of its ports to military or commercial vessels from nations hostile to Spain.

[5] The smuggling of duty-free goods remained a lucrative occupation, while heavy taxes and 'voluntary' donations caused unrest, such as the 1781 Revolt of the Comuneros in the Viceroyalty of New Granada.

Spanish participation in the Napoleonic Wars and the loss of much of its navy at the Battle of Trafalgar in 1805 severed links between the central government and its restive colonies in the Americas.