You have no other option, really. If you play chicken, you open yourself up to endless blackmail. If you're going to take a stand eventually, it's better to do it sooner than later, because if your adversary knows that you will eventually draw a line, allowing them to discover that line gradually encourages further pressure on you. Establishing the boundary early makes the threat more credible and reduces the incentive to test it.

It's like standing up to a bully the first time he pushes you, instead of giving in and calming yourself that one day you'll stand up to him. The Putins and Trumps of this world are simple creatures; such middle-school analogies describe them well.