The presidential order contravenes the constitution, according to the court, which confirms a lower instance's decision.
The purpose of Trump's policy in the matter is to prevent newborn babies of parents who are not legally resident in the USA from becoming American citizens.
The Supreme Court decided in June – in a success for Trump – to limit lower courts' right to issue orders applicable throughout the country.
But the appeals court in this case believes that the matter falls under one of the exceptions that the Supreme Court judges opened up for.
The US Constitution's 14th Amendment states that all who are born in the USA and are subject to American law are citizens.
At least nine lawsuits have been filed against Trump's order. Probably, the case will eventually bounce back to the Supreme Court.