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.

'Flex your muscles' = 'show people you are strong'. 'Sanctions' = to impose legal limits on trade with another country. The US shows it is strong by imposing sanctions against Russia. There are companies who sell goods to both the US and Russia. If they sell to the US, Russia will be angry. If they sell to Russia, the US will be angry. They are 'caught in the middle' - stuck between two opposing sides.