You may want to check with your carrier if hotspotting is allowed/supported. Some carriers don't allow it. I use my iPhone hotspot all the time with few issues. I'm usually using eSIMs from the Airalo app because I travel a lot. I do find if I let it my computer idle for awhile, the hotspot will automatically disconnect. It's a bit annoying, but I assume it's by design to prevent wasting hotspot data. I haven't looked into it.
Open your Keychain and clear the "_AppleWi-FiInternetTetheringSSID_" key as well as any keys that match your iPhone's Wi-Fi network name then try again to connect using the "Instant Hotspot" feature (aka find your iPhone in the top of your Wi-Fi menu on Mac - it should be displayed separately from other networks).
Apple tries to "improve" the personal hotspot experience and doesn't treat it like a normal Wi-Fi network - when that fails it fails completely instead of merely falling back to asking you for the network key.
