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Many years ago at a corporate training event we were playing a simulation game where each team had an "arson card" they could play during their turn. It doesn't take much imagination to understand what this card does: it turns the game into a scorched-earth strategy where the intent is to destroy the other team.

What work or phrase can I use to represent this idea? Something like, "if they don't agree to term x, we can take action y as our arson card."

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Nuclear option:

2 : an extreme option regarded as a drastic step or last resort (M-W)

The definition doesn't state the rather obvious connotation of violence, or the scorched earth that you mention, but the destructiveness is inherent to the meaning.

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