diff --git a/lisp/net/tramp.el b/lisp/net/tramp.el
index ffcf8f4929c..fc897fb2a7c 100644
--- a/lisp/net/tramp.el
+++ b/lisp/net/tramp.el
@@ -7406,7 +7406,8 @@ T1 and T2 are time values (as returned by `current-time' for example)."
 Suppress `shell-file-name'.  This is needed on w32 systems, which
 would use a wrong quoting for local file names.  See `w32-shell-name'."
   (let (shell-file-name)
-    (shell-quote-argument (file-name-unquote s))))
+    ;; Do not expand remote file names w/o a localname.
+    (shell-quote-argument (file-name-unquote s 'top))))
 
 ;; Currently (as of Emacs 20.5), the function `shell-quote-argument'
 ;; does not deal well with newline characters.  Newline is replaced by
diff --git a/test/lisp/net/tramp-tests.el b/test/lisp/net/tramp-tests.el
index d6eb782df3d..c0ad7205c5d 100644
--- a/test/lisp/net/tramp-tests.el
+++ b/test/lisp/net/tramp-tests.el
@@ -6524,8 +6524,7 @@ INPUT, if non-nil, is a string sent to the process."
   "Check that remote processes set / unset environment variables properly."
   :tags '(:expensive-test)
   (skip-unless (tramp--test-enabled))
-  (skip-unless (tramp--test-sh-p))
-  (skip-unless (not (tramp--test-crypt-p)))
+  (skip-unless (tramp--test-supports-environment-variables-p))
 
   (dolist (this-shell-command-to-string
 	   (append
@@ -7797,6 +7796,11 @@ This requires restrictions of file name syntax."
       (tramp--test-sh-p) (tramp--test-smb-p)
       (tramp--test-sudoedit-p)))
 
+(defun tramp--test-supports-environment-variables-p ()
+  "Return whether setting environment variables is supported."
+  (and (tramp--test-sh-p)
+       (not (tramp--test-crypt-p))))
+
 (defun tramp--test-check-files (&rest files)
   "Run a simple but comprehensive test over every file in FILES."
   (dolist (quoted (if (tramp--test-expensive-test-p) '(nil t) '(nil)))