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 "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".

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