A US appeals court has ruled that most tariffs issued by US President Donald Trump are illegal, potentially removing a foreign policy tool that Trump has used extensively during his second term in office.

The ruling affects Trump’s “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 his emergency economic powers act, calling them “invalid as contrary to law”.

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

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 an imbalance is harmful to US national security. But the court ruled that imposing tariffs is not within the president’s mandate, and that they are “a core Congressional power”.

The 127-page ruling says that the IEEPA “neither mentions tariffs (or any of its synonyms) nor has procedural safeguards that contain clear limits on the President’s power to impose tariffs”.

The power to impose taxes and tariffs therefore continues to belong to Congress, the court ruled, and the IEEPA does not override this.

The court wrote that it is unlikely that when Congress passed the law, it was intended to “depart from its past practice and grant the President unlimited authority to impose tariffs”.

“Whenever Congress intends to delegate to the President the authority to impose tariffs, it does so explicitly, either by using unequivocal terms like tariff and duty, or via an overall structure which makes clear that Congress is referring to tariffs,” the judges wrote.

The ruling comes in response to two lawsuits filed by small businesses and a coalition of US states.

The lawsuits were filed after Trump’s executive orders in May, which imposed a 10% tariff on every country in the world, as well as “reciprocal” tariffs on dozen of countries. Trump’s declared the date to be America’s “liberation day” from unfair trade policies.

In addition to those tariffs, the ruling also strikes down tariffs on Canada, Mexico and China, which Trump argues are necessary to stop the importation of drugs and illegal migrants.

Friday’s ruling does not apply to tariffs imposed on steel and aluminium, which were imposed under a different presidential authority.

In May, the New York-based Court of International Trade declared the tariffs were unlawful, in a ruling that has separately been appealed by the White House.