Well, we can still ask for contraband and destroy the trader if he refuses. As it brakes the embargo, even if by id it's not stated as such, you can still be considered a smuggler and destroyed.
Edit:
Can demand traders who belong to corporations headquartered in Houses that Liberty is at war with to drop all cargo and destroy ships if they refuse to comply,
Can demand contraband, levy fines and destroy ships if they refuse to comply with contraband demands