To illustrate an old point - that it's hard to distinguish between extortion and trade negotiations - here's a schematic diagram of extortion, alternating actions by player B (blackmailer/extorter//blue) and V (victim//violet):

The extorter can let the default Def happen, or can instead do a threat, ending up in point T. Then the victim can resist (Res) or surrender (Sur). If the victim resists, the extorter has the option of carrying out their threat (C) or not doing so (¬C).

You need a few conditions to make this into a extortion situation:

Sur has to be the best outcome for B (or else the extortion has no point).
To make sure that T is a true threat, Sur has to be worse than Def for V, and C has to be worse that ¬C and Def for B.
And to make this into extortion, C has to be worse than Def for V.

A mere threat doesn't make this into extortion. Indeed, trade negotiations are a series of repeated threats from both sides, making offers with the implicit threat that they will walk away from the deal entirely if that offer is not accepted.

But if C is worse that Def for V, then this seems a true extortion: V will end up worse if they resist a extorter who carries out their threats, and they would have much preferred that the extorter not be able to make credible threats in the first place. And the only reason the extorter made the threats, was to force the victim to surrender.

Fairness and equity

Note that this is not about fairness or niceness. It's perfectly possible to extort someone into giving you fair treatment (depending on how you see the default point, many of the boycotts during the civil right movement would count as extortion).

The all important default

This model seems clear; so why is it so hard to identify extortion in real life? One key issue is disagreement over the default point. Consider the following situations:

During the Cuban missile crisis, it was clear to the Americans that the default was no nuclear missiles in Cuba, and the soviets were recklessly violating this default. To the USSR, the default was obviously that countries could station nuclear missiles on their allies' territories (like the Americans were doing in Turkey). Then, once the blockade was in place and the soviet ships were on their way, the default seems to be nuclear war (meaning that practically nothing could count as extortion in this situation).
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Negotiation