A US appeals court has ruled that most tariffs issued by US President Donald Trump are illegal, setting up a potential legal showdown that could upend his foreign policy agenda.

The ruling affects Trump's so-called "reciprocal" tariffs, imposed on most countries around the world, as well as other tariffs slapped on China, Mexico and Canada.

In a 7-4 decision, the US Court of Appeals for the Federal Circuit rejected Trump's argument that the tariffs were permitted under an emergency economic powers act, calling them "invalid as contrary to law".

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The ruling will not take effect until 14 October, to give the administration time to ask the US Supreme Court to take up the case.

Trump criticised the appeals court and its ruling on Truth Social, saying: "If allowed to stand, this Decision would literally destroy the United States of America."

He wrote: "Today a Highly Partisan Appeals Court incorrectly said that our Tariffs should be removed, but they know the United States of America will win in the end.

"If these Tariffs ever went away, it would be a total disaster for the Country. It would make us financially weak, and we have to be strong."

Trump had justified the tariffs under the International Emergency Economic Powers Act (IEEPA), which gives the president the power to act against "unusual and extraordinary" threats.

Trump has declared a national emergency on trade, arguing that a trade imbalance was harmful to US national security. But the court ruled that imposing tariffs was not within the president's mandate, and that setting levies was "a core Congressional power".