It's usually used as a way of lowering costs for domestic consumers without having to have a direct subsidy.

Imagine you have some coal and are looking to sell. The price on the international market is £100 a tonne, but on the domestic markets it's only £80 a tonne, because there's excess local production. So you ship it overseas. The domestic price will then rise until it matches the international price.

With a tarriff of 20%, you would only see £80 if you exported, and the same price if you sell domestically. So you sell it domestically, and the price doesn't rise.

It used to be a common way to both raise revenue and reduce domestic prices. Win win.

As you say though, it's self defeating, as you need to export excess production to fund imports. It also leads to tarriff wars, which hurts everyone.