I have a hard time believing that the government could do this but the way I read it says that if I said:
As a business, I disagree with the human rights violations the government of China is engaged in. I am again Saudis Arabia's ban of alcohol on its residents, its treatment of gay people--including death for simply being gay and the way it withholds rights from women. I also deplore Israel's treatment of the Palestinians, including the demolishing of houses.
Therefore, I will not allow my product to be sold in a way which results in any of these governments collecting tax on it, this supporting the government.
The way this reads, it seems the government can say, "Whoa, you can't to that to Israel though." and ignore the other two. Unfair and prejudicial in my opinion.
I would note my understanding is that fines for non-compliance have historically been relatively light and therefore, to my knowledge, these regulations have not been seriously tested in court in recent times. (And the article I read suggested there was a causal link between those two facts.)