What was the XYZ Affair and how did it affect the US?

The United States and France were having some difficulties, partly because of the Jay Treaty (which George Washington signed to prevent a war with Great Britain). The Jay Treaty limited France's ability to trade in US ports. In retaliation to the newly signed treaty, France began seizing American ships. In 1797, President John Adams sent a diplomatic commission, including Elbridge Gerry, John Marshall, and Charles Pinckney, to Paris to negotiate with the French and come to some sort of compromise. Agents of Talleyrand, the French Foreign Minister, approached the American diplomats and demanded a US loan as well as a personal bribe for Talleyrand if they wanted to meet with him. Marshall, one of the US diplomats, sent dispatches from Paris to John Adams, who began to prepare for war since exchanging money was not going to happen.  
This diplomatic incident between the United States and France is called the XYZ Affair. It was coined the XYZ affair because when then-president John Adams released the documents—Marshall’s dispatches—to Congress, he replaced the names of the three French diplomats, Hottinguer, Bellamny, and Hauteval, with the letters X, Y, and Z. 
The XYZ Affair caused outrage and a political firestorm among Americans, and it resulted in an undeclared Quasi-War from 1798–1800 between the United States and France, mostly fought by sea. By December of 1801, both the United States and France had ratified the Treaty of Mortefontaine—which was the result of the Convention of 1800, which came about after Talleyrand accepted a new American Commission to try to prevent a full-scale war. 
http://www.john-adams-heritage.com/the-xyz-affair/

https://history.state.gov/milestones/1784-1800/xyz