Hi @treebeard
As Arubislander said when turning on the hotspot your phone now uses the WIFI chip as an AP an not as a client anymore.
So it should use the mobile data (3G, 4G, 5G) and it is really doubtful that it uses the WIFI network.
In order to serve as an AP and as a client at the same time, the device would need 2 chips and 2 antennas, one for reception, the other to emit.
What is probably your issue is that a phone acts as a bad AP and the antenna is not the best, plus the channel selection might not be the best and if the wifi chip is warming up it can also degrade the mobile data connection as well. The hardware is often not intended to be used this way even if the software allows it.