More like a "troll" or something. He wants to use your country to walk through and as a thank you he gives you an embargo to trade with him.
Players often try to do such stuff with new or unexperienced players. As it might be an easy target to fight against. As well if he runs through your land he can see your troops so he knows very well how and when he should attack.
Here a suggestion what to do what accept it,let move his army into your land,after first city going to they second put on peace/embarko to.His army will be stuck in your lands or hit second city fort . After kill it whar arty . He won't bully ever again after for sure.