You are correct. Being embargoed with respect to the US market would devastate the Chinese economy. Just like being cut off from US oil shipments in 1941 was seen as a devastating move against the Japanese economy.
The question is, what would be the Chinese response?
Maybe they will refuse to ship any more cheap garbage to Walmart. I guess Walmart will have to source their cheap garbage somewhere else.
There is nothing that the west imports from China that we cannot make ourselves. Some point to Chinese production of rare earths as irreplaceable but they are wrong. There are many rare earth deposits in North America just waiting to be exploited.
China is a net importer of energy, specifically crude oil from the middle east. Cheap, plentiful energy is the engine of a modern economy. Cut it off or increase the price and China suffers immediately.
Furthermore Chinese cities are choking on air pollution and withering from a lack of clean, potable water. This is a huge public health problem that gets worse by the day.
History must be utterly mystifying to someone who thinks every event occurs in a vacuum, totally unrelated to any other event...