It is metaphorically meant.
"to flex your muscles" means to tense your muscles up, so you can show them off.
That's what, metaphorically speaking, a lot of countries do. They try to show off their "muscles", meaning their power and strength.
Sanctions and trade agreements cause problems for companies that ship and sell internationally. If, for example, the USA decides on a "sanction" to stop taking certain goods from Russia anymore then it will cause financial problems for Russian companies that used to sell goods to the US.