A federal appeals court has ruled that most of Donald Trump's tariffs are an overreach of his use of emergency powers as president.


The so-called reciprocal tariffs - imposed on nearly every country the US trades with - are being illegally imposed, the US Court of Appeals said on Friday.


The decision upholds a ruling in May from the Court of International Trade, which also rejected Trump's argument that his global tariffs were permitted under an emergency economic powers act.


Many of the tariffs that would be affected by the ruling stem from an announcement in April of a flat 10% rate on imports from all countries, which Trump said would even out 'unfair' trade relations with the US.


The court did not halt the tariffs but instead said they would remain in place until mid-October, setting up a further legal challenge in the US Supreme Court.


In its 7-4 decision, the appellate court backed a lower court's finding that Trump did not have the authority to impose global tariffs. This was largely because of the law Trump used to justify the policies, the International Emergency Economic Powers Act (IEEPA), which the judges said did not grant 'the power to impose tariffs, duties, or the like, or the power to tax'.


The IEEPA, which grants a US president significant authority to respond to national emergencies, has been used by various presidents, but the appeals court stated that it 'did not give the president wide-ranging authority to impose tariffs'.


Beyond being a significant setback to Trump's agenda, the ruling could have immediate economic consequences, potentially instigating uncertainty in global markets. Tariffs are essentially taxes that impact the cost of importing goods, influencing sales and profit margins for businesses.


The case is expected to progress to the Supreme Court, as Trump continues to assert that the tariffs are essential to national security and economic stability. Trump's immediate reaction to the ruling criticized it as partisan, warning of dire consequences for the nation if upheld.


If the Supreme Court agrees with the appeals court, it could trigger uncertainties over billions raised from import taxes and possibly derail current and future trade negotiations, impacting the U.S.'s economic landscape and Trump's political clout.