It is both. Increase the costs of doing business -> price goes up and demand goes down. BotH local customers and external company loose.

This can be sensible if you need to protect a small economy so that the customers profit from having work and businesses grow to become competitive. E.g. all the industrialized nations had protectionist measure to indistrialize and then pushing “free trade” after was a ploy to keep emerging economies down and their natural ressources easily exploitable.

Between two industrialized (or post industrial) economies this does not make sense.