The economic strategy of the southern states as they seceeded from the Union to form the Confederacy was based around the power of their chief export, cotton. The feeling of the Confederate leadership was that the need for cotton would force European powers to back them in their revolt against "northern tyranny."
Although the southerners greatly overestimated the power of their place in the cotton trade, Europe began to eventually feel the pinch in their textile factories as the war wore on and the northern blockade cut off most of the southern trade routes. England especially began to show a willingness to support the "rebellion" and the "revolutionaries" of the Confederacy in their "war against oppression." That particular spin on the American Civil War was one the European powers could sell to their people and allies as a reason to throw their support to the Confederacy.
This rising tide became the driving reason behind Abraham Lincoln's Emancipation Proclamation. The support Europe was willing to throw to the Confederacy was lost. They were willing to support a rebellion against oppression, but the Emancipation Proclamation changed the nature of the war. It was no longer about the rights of states to decide their own course. It was about advocating the "freedom of the Negro" and eradicating slavery. The Europeans stepped back, unwilling to be perceived as supporting slavery.
The failure of King Cotton diplomacy took further steps back when markets in India and the near east opened as suppliers to Europe. The growing industrial power of the north provided important trade Europe was unwilling to lose. Bales of cotton sat rotting in southern warehouses and at times was sold at embarrassingly low prices to northern speculators who would move it across the border and profit heavily from its sale.
The original intention of King Cotton diplomacy had been to force European nations to break the northern blockade. That failed completely, and as the south sought new ways to keep trade open, even smugglers had trouble breaking even.