Sheep had gained a strong foothold in the colonies despite England's attempts to keep them out. England's woolen mills made a tidy profit selling cloth around the world and didn't want any competition. Some estimate that as much as 65% of England's economy rested on its cloth production.
The colonists of North America, however, proved to be an independent bunch. They not only smuggled in sheep, they started making their own clothing instead of purchasing England's expensive cloth. To add insult to injury, they did it so well, they quickly built it into an industry. When they dared to export their woolen goods to other ports, King William III issued the Wool Act.