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For 5 turns, one target cannot use its held item. Items thrown at the target with Fling will still activate for it. If the target uses Baton Pass, the replacement will remain unable to use items. Pokemon protected by Magic Coat or the ability Magic Bounce are unaffected and instead use this move themselves. The effect lasts until the user switches out or faints. If a Pokemon under this effect uses Bug Bite or Pluck on another Pokemon's Berry, they remove the Berry but do not consume it. In-game, it also prevents the trainer from using any items on that Pokemon.
Embargo may seem useful, but in reality it has little competitive bearing. First of all, the target can simply switch, nullifying its effect. Secondly, the user is required to give up a moveslot for this unreliable move, and often it cannot spare a filler move. Lastly, simply dishing out damage will incapacitate the target quicker than nullifying its item, and thus this move should not be used.