The Trent Affair came close to causing war between the United States and Great Britain when two Confederate messengers were removed from the British steamer ‘Trent’. The two men were on their way to Europe to gain recognition as a separate country from Britain and France. The British captain claimed the two were under the protection of the British flag, but the neutrality of Britain was ignored as the two men were “captured” and removed anyway.
Britain was enraged at this ‘breach of international law’ and came close to declaring war on the Northern States. After several weeks of negotiation and conversation, the two Confederates were released and they continued their mission to Britain, but failed to establish the diplomatic relationship desired, which would have given credibility on the international front to the Confederacy.
The Union’s goal was to prevent any kind of diplomatic recognition from any country toward the Confederacy, and continued to proclaim the war was strictly an “internal insurrection” and the Confederacy should not be granted any status or rights under international law. It was also implied any such recognition would be considered an “unfriendly act” towards the United States. Britain, already busy watching Napoleon III in France and Otto von Bismarck in Prussia, had no time for a third front of potential war.
In the previous May 1861, Queen Victoria had issued a statement of neutrality recognizing the South as a belligerent state (i.e. a country that wages war). This status of neutrality allowed Confederate ships in British ports to be treated the same as Union ships: they could obtain fuel, repairs and supplies but could not obtain military equipment.
The Union was livid over the designation as they felt it was just one step away from recognizing the South with international diplomacy rights. Word was sent that formal recognition would make Britain an enemy of the U.S. When it was learned two ambassadors would be on board the Trent, the two men were removed, their trip delayed by weeks, with an end result of diplomacy not being recognized. "The United States had lost face, but the Confederacy had lost her best opportunity for European intervention. During the balance of the war no other issue brought Great Britain so close to war ."
(quote source: http://clevelandcivilwarroundtable.com/articles/naval/trent_affair.htm )