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.
The effect of the Wool Act was that all wool and wool products must be sold to England. And taxed. It was taxed when it left port in the colonies and taxed again when it reached England. Then England would resell it to other countries ... and even back to the American Colonies. That didn't set well with the Colonists.
Because of the Wool Act, wearing homespun, often the combination of linen and wool known as linsey woolsey, was seen as a mark of patriotism more than seventy years before the Revolution.