The UN already provides election monitoring services so we have a well defined set of criteria under which we consider elections to be free and fair.
So let's say that we have a democracy by that definition, for example Myanmar — a big garment exporter — in 2020 or so. The 2020 elections were described by international organisations as "free and fair".
Should the result of the coup d'état that happened shortly after those elections be that not only do the garment workers lose their right to vote in future free and fair elections, but they also lose their jobs when the factories are closed due to foreign countries introducing their "don't trade with non-democracies" policy? Do we think that would improve or worsen the situation?
It's not an easy choice when human lives hang in the balance. My view is that allowing authoritarians to entrench themselves for years, generations, possibly centuries is by far worse. We know that democracy is a fragile state of affairs. It rarely occurs without a violent overthrow of the elite and often doesn't last very long. Despotism, on the other hand, is common and long lasting because it is unabashed about cowing people through violence, torture, murder, blackmail, and all the other evils you can imagine. If we want to keep our freedom we must continually resist all attempts to take it.
Even sanctions generally apply only to specific individuals and groups, rather than entire economies. Unfortunately, risk-averse financial institituions generally treat them in practice as applying to entire economies, since it can be virtually impossible otherwise to ensure you are not dealing with a sanctioned individual/group.