fix: local variables should not be overridden by remote variables during `terraform import` (#29972)

* fix: local variables should not be overridden by remote variables during `terraform import`

* chore: applied the same fix in the 'internal/cloud' package

* backport changes from cloud package to remote package

Co-authored-by: Alisdair McDiarmid <alisdair@users.noreply.github.com>
Co-authored-by: uturunku1 <luces.huayhuaca@gmail.com>

internal/backend/remote/backend.go

@@ -673,19 +673,14 @@ func (b *Remote) StateMgr(name string) (statemgr.Full, error) {
 	return &remote.State{Client: client}, nil
 }
 
-// Operation implements backend.Enhanced.
-func (b *Remote) Operation(ctx context.Context, op *backend.Operation) (*backend.RunningOperation, error) {
-	// Get the remote workspace name.
-	name := op.Workspace
-	switch {
-	case op.Workspace == backend.DefaultStateName:
-		name = b.workspace
-	case b.prefix != "" && !strings.HasPrefix(op.Workspace, b.prefix):
-		name = b.prefix + op.Workspace
-	}
+func isLocalExecutionMode(execMode string) bool {
+	return execMode == "local"
+}
 
+func (b *Remote) fetchWorkspace(ctx context.Context, organization string, name string) (*tfe.Workspace, error) {
+	remoteWorkspaceName := b.getRemoteWorkspaceName(name)
 	// Retrieve the workspace for this operation.
-	w, err := b.client.Workspaces.Read(ctx, b.organization, name)
+	w, err := b.client.Workspaces.Read(ctx, b.organization, remoteWorkspaceName)
 	if err != nil {
 		switch err {
 		case context.Canceled:
@@ -695,17 +690,29 @@ func (b *Remote) Operation(ctx context.Context, op *backend.Operation) (*backend
 				"workspace %s not found\n\n"+
 					"The configured \"remote\" backend returns '404 Not Found' errors for resources\n"+
 					"that do not exist, as well as for resources that a user doesn't have access\n"+
-					"to. If the resource does exist, please check the rights for the used token.",
+					"to. If the resource does exist, please check the rights for the used token",
 				name,
 			)
 		default:
-			return nil, fmt.Errorf(
-				"The configured \"remote\" backend encountered an unexpected error:\n\n%s",
+			err := fmt.Errorf(
+				"the configured \"remote\" backend encountered an unexpected error:\n\n%s",
 				err,
 			)
+			return nil, err
 		}
 	}
 
+	return w, nil
+}
+
+// Operation implements backend.Enhanced.
+func (b *Remote) Operation(ctx context.Context, op *backend.Operation) (*backend.RunningOperation, error) {
+	w, err := b.fetchWorkspace(ctx, b.organization, op.Workspace)
+
+	if err != nil {
+		return nil, err
+	}
+
 	// Terraform remote version conflicts are not a concern for operations. We
 	// are in one of three states:
 	//
@@ -718,7 +725,7 @@ func (b *Remote) Operation(ctx context.Context, op *backend.Operation) (*backend
 	b.IgnoreVersionConflict()
 
 	// Check if we need to use the local backend to run the operation.
-	if b.forceLocal || !w.Operations {
+	if b.forceLocal || isLocalExecutionMode(w.ExecutionMode) {
 		// Record that we're forced to run operations locally to allow the
 		// command package UI to operate correctly
 		b.forceLocal = true
@@ -902,7 +909,7 @@ func (b *Remote) VerifyWorkspaceTerraformVersion(workspaceName string) tfdiags.D
 
 	// If the workspace has remote operations disabled, the remote Terraform
 	// version is effectively meaningless, so we'll skip version verification.
-	if !workspace.Operations {
+	if isLocalExecutionMode(workspace.ExecutionMode) {
 		return nil
 	}
 

internal/backend/remote/backend_apply_test.go

@@ -1526,36 +1526,36 @@ func TestRemote_applyVersionCheck(t *testing.T) {
 		localVersion  string
 		remoteVersion string
 		forceLocal    bool
-		hasOperations bool
+		executionMode string
 		wantErr       string
 	}{
 		"versions can be different for remote apply": {
 			localVersion:  "0.14.0",
 			remoteVersion: "0.13.5",
-			hasOperations: true,
+			executionMode: "remote",
 		},
 		"versions can be different for local apply": {
 			localVersion:  "0.14.0",
 			remoteVersion: "0.13.5",
-			hasOperations: false,
+			executionMode: "local",
 		},
 		"force local with remote operations and different versions is acceptable": {
 			localVersion:  "0.14.0",
 			remoteVersion: "0.14.0-acme-provider-bundle",
 			forceLocal:    true,
-			hasOperations: true,
+			executionMode: "remote",
 		},
 		"no error if versions are identical": {
 			localVersion:  "0.14.0",
 			remoteVersion: "0.14.0",
 			forceLocal:    true,
-			hasOperations: true,
+			executionMode: "remote",
 		},
 		"no error if force local but workspace has remote operations disabled": {
 			localVersion:  "0.14.0",
 			remoteVersion: "0.13.5",
 			forceLocal:    true,
-			hasOperations: false,
+			executionMode: "local",
 		},
 	}
 
@@ -1591,7 +1591,7 @@ func TestRemote_applyVersionCheck(t *testing.T) {
 				b.organization,
 				b.workspace,
 				tfe.WorkspaceUpdateOptions{
-					Operations:       tfe.Bool(tc.hasOperations),
+					ExecutionMode:    tfe.String(tc.executionMode),
 					TerraformVersion: tfe.String(tc.remoteVersion),
 				},
 			)
@@ -1644,7 +1644,7 @@ func TestRemote_applyVersionCheck(t *testing.T) {
 				hasRemote := strings.Contains(output, "Running apply in the remote backend")
 				hasSummary := strings.Contains(output, "1 added, 0 changed, 0 destroyed")
 				hasResources := run.State.HasManagedResourceInstanceObjects()
-				if !tc.forceLocal && tc.hasOperations {
+				if !tc.forceLocal && !isLocalExecutionMode(tc.executionMode) {
 					if !hasRemote {
 						t.Errorf("missing remote backend header in output: %s", output)
 					}

internal/backend/remote/backend_context.go

@@ -82,22 +82,6 @@ func (b *Remote) LocalRun(op *backend.Operation) (*backend.LocalRun, statemgr.Fu
 	}
 	ret.Config = config
 
-	// The underlying API expects us to use the opaque workspace id to request
-	// variables, so we'll need to look that up using our organization name
-	// and workspace name.
-	remoteWorkspaceID, err := b.getRemoteWorkspaceID(context.Background(), op.Workspace)
-	if err != nil {
-		diags = diags.Append(fmt.Errorf("error finding remote workspace: %w", err))
-		return nil, nil, diags
-	}
-
-	log.Printf("[TRACE] backend/remote: retrieving variables from workspace %s/%s (%s)", remoteWorkspaceName, b.organization, remoteWorkspaceID)
-	tfeVariables, err := b.client.Variables.List(context.Background(), remoteWorkspaceID, tfe.VariableListOptions{})
-	if err != nil && err != tfe.ErrResourceNotFound {
-		diags = diags.Append(fmt.Errorf("error loading variables: %w", err))
-		return nil, nil, diags
-	}
-
 	if op.AllowUnsetVariables {
 		// If we're not going to use the variables in an operation we'll be
 		// more lax about them, stubbing out any unset ones as unknown.
@@ -105,14 +89,41 @@ func (b *Remote) LocalRun(op *backend.Operation) (*backend.LocalRun, statemgr.Fu
 		// but not enough information to run a real operation (plan, apply, etc)
 		ret.PlanOpts.SetVariables = stubAllVariables(op.Variables, config.Module.Variables)
 	} else {
-		if tfeVariables != nil {
-			if op.Variables == nil {
-				op.Variables = make(map[string]backend.UnparsedVariableValue)
+		// The underlying API expects us to use the opaque workspace id to request
+		// variables, so we'll need to look that up using our organization name
+		// and workspace name.
+		remoteWorkspaceID, err := b.getRemoteWorkspaceID(context.Background(), op.Workspace)
+		if err != nil {
+			diags = diags.Append(fmt.Errorf("error finding remote workspace: %w", err))
+			return nil, nil, diags
+		}
+
+		w, err := b.fetchWorkspace(context.Background(), b.organization, op.Workspace)
+		if err != nil {
+			diags = diags.Append(fmt.Errorf("error loading workspace: %w", err))
+			return nil, nil, diags
+		}
+
+		if isLocalExecutionMode(w.ExecutionMode) {
+			log.Printf("[TRACE] skipping retrieving variables from workspace %s/%s (%s), workspace is in Local Execution mode", remoteWorkspaceName, b.organization, remoteWorkspaceID)
+		} else {
+			log.Printf("[TRACE] backend/remote: retrieving variables from workspace %s/%s (%s)", remoteWorkspaceName, b.organization, remoteWorkspaceID)
+			tfeVariables, err := b.client.Variables.List(context.Background(), remoteWorkspaceID, tfe.VariableListOptions{})
+			if err != nil && err != tfe.ErrResourceNotFound {
+				diags = diags.Append(fmt.Errorf("error loading variables: %w", err))
+				return nil, nil, diags
 			}
-			for _, v := range tfeVariables.Items {
-				if v.Category == tfe.CategoryTerraform {
-					op.Variables[v.Key] = &remoteStoredVariableValue{
-						definition: v,
+			if tfeVariables != nil {
+				if op.Variables == nil {
+					op.Variables = make(map[string]backend.UnparsedVariableValue)
+				}
+				for _, v := range tfeVariables.Items {
+					if v.Category == tfe.CategoryTerraform {
+						if _, ok := op.Variables[v.Key]; !ok {
+							op.Variables[v.Key] = &remoteStoredVariableValue{
+								definition: v,
+							}
+						}
 					}
 				}
 			}

internal/backend/remote/backend_context_test.go

@@ -2,6 +2,9 @@ package remote
 
 import (
 	"context"
+	"github.com/hashicorp/terraform/internal/terraform"
+	"github.com/hashicorp/terraform/internal/tfdiags"
+	"reflect"
 	"testing"
 
 	tfe "github.com/hashicorp/go-tfe"
@@ -233,3 +236,234 @@ func TestRemoteContextWithVars(t *testing.T) {
 		})
 	}
 }
+
+func TestRemoteVariablesDoNotOverride(t *testing.T) {
+	catTerraform := tfe.CategoryTerraform
+
+	varName1 := "key1"
+	varName2 := "key2"
+	varName3 := "key3"
+
+	varValue1 := "value1"
+	varValue2 := "value2"
+	varValue3 := "value3"
+
+	tests := map[string]struct {
+		localVariables    map[string]backend.UnparsedVariableValue
+		remoteVariables   []*tfe.VariableCreateOptions
+		expectedVariables terraform.InputValues
+	}{
+		"no local variables": {
+			map[string]backend.UnparsedVariableValue{},
+			[]*tfe.VariableCreateOptions{
+				{
+					Key:      &varName1,
+					Value:    &varValue1,
+					Category: &catTerraform,
+				},
+				{
+					Key:      &varName2,
+					Value:    &varValue2,
+					Category: &catTerraform,
+				},
+				{
+					Key:      &varName3,
+					Value:    &varValue3,
+					Category: &catTerraform,
+				},
+			},
+			terraform.InputValues{
+				varName1: &terraform.InputValue{
+					Value:      cty.StringVal(varValue1),
+					SourceType: terraform.ValueFromInput,
+					SourceRange: tfdiags.SourceRange{
+						Filename: "",
+						Start:    tfdiags.SourcePos{Line: 0, Column: 0, Byte: 0},
+						End:      tfdiags.SourcePos{Line: 0, Column: 0, Byte: 0},
+					},
+				},
+				varName2: &terraform.InputValue{
+					Value:      cty.StringVal(varValue2),
+					SourceType: terraform.ValueFromInput,
+					SourceRange: tfdiags.SourceRange{
+						Filename: "",
+						Start:    tfdiags.SourcePos{Line: 0, Column: 0, Byte: 0},
+						End:      tfdiags.SourcePos{Line: 0, Column: 0, Byte: 0},
+					},
+				},
+				varName3: &terraform.InputValue{
+					Value:      cty.StringVal(varValue3),
+					SourceType: terraform.ValueFromInput,
+					SourceRange: tfdiags.SourceRange{
+						Filename: "",
+						Start:    tfdiags.SourcePos{Line: 0, Column: 0, Byte: 0},
+						End:      tfdiags.SourcePos{Line: 0, Column: 0, Byte: 0},
+					},
+				},
+			},
+		},
+		"single conflicting local variable": {
+			map[string]backend.UnparsedVariableValue{
+				varName3: testUnparsedVariableValue(varValue3),
+			},
+			[]*tfe.VariableCreateOptions{
+				{
+					Key:      &varName1,
+					Value:    &varValue1,
+					Category: &catTerraform,
+				}, {
+					Key:      &varName2,
+					Value:    &varValue2,
+					Category: &catTerraform,
+				}, {
+					Key:      &varName3,
+					Value:    &varValue3,
+					Category: &catTerraform,
+				},
+			},
+			terraform.InputValues{
+				varName1: &terraform.InputValue{
+					Value:      cty.StringVal(varValue1),
+					SourceType: terraform.ValueFromInput,
+					SourceRange: tfdiags.SourceRange{
+						Filename: "",
+						Start:    tfdiags.SourcePos{Line: 0, Column: 0, Byte: 0},
+						End:      tfdiags.SourcePos{Line: 0, Column: 0, Byte: 0},
+					},
+				},
+				varName2: &terraform.InputValue{
+					Value:      cty.StringVal(varValue2),
+					SourceType: terraform.ValueFromInput,
+					SourceRange: tfdiags.SourceRange{
+						Filename: "",
+						Start:    tfdiags.SourcePos{Line: 0, Column: 0, Byte: 0},
+						End:      tfdiags.SourcePos{Line: 0, Column: 0, Byte: 0},
+					},
+				},
+				varName3: &terraform.InputValue{
+					Value:      cty.StringVal(varValue3),
+					SourceType: terraform.ValueFromNamedFile,
+					SourceRange: tfdiags.SourceRange{
+						Filename: "fake.tfvars",
+						Start:    tfdiags.SourcePos{Line: 1, Column: 1, Byte: 0},
+						End:      tfdiags.SourcePos{Line: 1, Column: 1, Byte: 0},
+					},
+				},
+			},
+		},
+		"no conflicting local variable": {
+			map[string]backend.UnparsedVariableValue{
+				varName3: testUnparsedVariableValue(varValue3),
+			},
+			[]*tfe.VariableCreateOptions{
+				{
+					Key:      &varName1,
+					Value:    &varValue1,
+					Category: &catTerraform,
+				}, {
+					Key:      &varName2,
+					Value:    &varValue2,
+					Category: &catTerraform,
+				},
+			},
+			terraform.InputValues{
+				varName1: &terraform.InputValue{
+					Value:      cty.StringVal(varValue1),
+					SourceType: terraform.ValueFromInput,
+					SourceRange: tfdiags.SourceRange{
+						Filename: "",
+						Start:    tfdiags.SourcePos{Line: 0, Column: 0, Byte: 0},
+						End:      tfdiags.SourcePos{Line: 0, Column: 0, Byte: 0},
+					},
+				},
+				varName2: &terraform.InputValue{
+					Value:      cty.StringVal(varValue2),
+					SourceType: terraform.ValueFromInput,
+					SourceRange: tfdiags.SourceRange{
+						Filename: "",
+						Start:    tfdiags.SourcePos{Line: 0, Column: 0, Byte: 0},
+						End:      tfdiags.SourcePos{Line: 0, Column: 0, Byte: 0},
+					},
+				},
+				varName3: &terraform.InputValue{
+					Value:      cty.StringVal(varValue3),
+					SourceType: terraform.ValueFromNamedFile,
+					SourceRange: tfdiags.SourceRange{
+						Filename: "fake.tfvars",
+						Start:    tfdiags.SourcePos{Line: 1, Column: 1, Byte: 0},
+						End:      tfdiags.SourcePos{Line: 1, Column: 1, Byte: 0},
+					},
+				},
+			},
+		},
+	}
+
+	for name, test := range tests {
+		t.Run(name, func(t *testing.T) {
+			configDir := "./testdata/variables"
+
+			b, bCleanup := testBackendDefault(t)
+			defer bCleanup()
+
+			_, configLoader, configCleanup := initwd.MustLoadConfigForTests(t, configDir)
+			defer configCleanup()
+
+			workspaceID, err := b.getRemoteWorkspaceID(context.Background(), backend.DefaultStateName)
+			if err != nil {
+				t.Fatal(err)
+			}
+
+			streams, _ := terminal.StreamsForTesting(t)
+			view := views.NewStateLocker(arguments.ViewHuman, views.NewView(streams))
+
+			op := &backend.Operation{
+				ConfigDir:    configDir,
+				ConfigLoader: configLoader,
+				StateLocker:  clistate.NewLocker(0, view),
+				Workspace:    backend.DefaultStateName,
+				Variables:    test.localVariables,
+			}
+
+			for _, v := range test.remoteVariables {
+				b.client.Variables.Create(context.TODO(), workspaceID, *v)
+			}
+
+			lr, _, diags := b.LocalRun(op)
+
+			if diags.HasErrors() {
+				t.Fatalf("unexpected error\ngot:  %s\nwant: <no error>", diags.Err().Error())
+			}
+			// When Context() succeeds, this should fail w/ "workspace already locked"
+			stateMgr, _ := b.StateMgr(backend.DefaultStateName)
+			if _, err := stateMgr.Lock(statemgr.NewLockInfo()); err == nil {
+				t.Fatal("unexpected success locking state after Context")
+			}
+
+			actual := lr.PlanOpts.SetVariables
+			expected := test.expectedVariables
+
+			for expectedKey := range expected {
+				actualValue := actual[expectedKey]
+				expectedValue := expected[expectedKey]
+
+				if !reflect.DeepEqual(*actualValue, *expectedValue) {
+					t.Fatalf("unexpected variable '%s'\ngot:  %v\nwant: %v", expectedKey, actualValue, expectedValue)
+				}
+			}
+		})
+	}
+}
+
+type testUnparsedVariableValue string
+
+func (v testUnparsedVariableValue) ParseVariableValue(mode configs.VariableParsingMode) (*terraform.InputValue, tfdiags.Diagnostics) {
+	return &terraform.InputValue{
+		Value:      cty.StringVal(string(v)),
+		SourceType: terraform.ValueFromNamedFile,
+		SourceRange: tfdiags.SourceRange{
+			Filename: "fake.tfvars",
+			Start:    tfdiags.SourcePos{Line: 1, Column: 1, Byte: 0},
+			End:      tfdiags.SourcePos{Line: 1, Column: 1, Byte: 0},
+		},
+	}, nil
+}

internal/backend/remote/backend_plan_test.go

@@ -1241,7 +1241,7 @@ func TestRemote_planOtherError(t *testing.T) {
 	}
 
 	if !strings.Contains(err.Error(),
-		"The configured \"remote\" backend encountered an unexpected error:\n\nI'm a little teacup") {
+		"the configured \"remote\" backend encountered an unexpected error:\n\nI'm a little teacup") {
 		t.Fatalf("expected error message, got: %s", err.Error())
 	}
 }

internal/backend/remote/backend_test.go

@@ -556,21 +556,21 @@ func TestRemote_StateMgr_versionCheckLatest(t *testing.T) {
 
 func TestRemote_VerifyWorkspaceTerraformVersion(t *testing.T) {
 	testCases := []struct {
-		local      string
-		remote     string
-		operations bool
-		wantErr    bool
+		local         string
+		remote        string
+		executionMode string
+		wantErr       bool
 	}{
-		{"0.13.5", "0.13.5", true, false},
-		{"0.14.0", "0.13.5", true, true},
-		{"0.14.0", "0.13.5", false, false},
-		{"0.14.0", "0.14.1", true, false},
-		{"0.14.0", "1.0.99", true, false},
-		{"0.14.0", "1.1.0", true, false},
-		{"0.14.0", "1.2.0", true, true},
-		{"1.2.0", "1.2.99", true, false},
-		{"1.2.0", "1.3.0", true, true},
-		{"0.15.0", "latest", true, false},
+		{"0.13.5", "0.13.5", "remote", false},
+		{"0.14.0", "0.13.5", "remote", true},
+		{"0.14.0", "0.13.5", "local", false},
+		{"0.14.0", "0.14.1", "remote", false},
+		{"0.14.0", "1.0.99", "remote", false},
+		{"0.14.0", "1.1.0", "remote", false},
+		{"0.14.0", "1.2.0", "remote", true},
+		{"1.2.0", "1.2.99", "remote", false},
+		{"1.2.0", "1.3.0", "remote", true},
+		{"0.15.0", "latest", "remote", false},
 	}
 	for _, tc := range testCases {
 		t.Run(fmt.Sprintf("local %s, remote %s", tc.local, tc.remote), func(t *testing.T) {
@@ -601,7 +601,7 @@ func TestRemote_VerifyWorkspaceTerraformVersion(t *testing.T) {
 				b.organization,
 				b.workspace,
 				tfe.WorkspaceUpdateOptions{
-					Operations:       tfe.Bool(tc.operations),
+					ExecutionMode:    &tc.executionMode,
 					TerraformVersion: tfe.String(tc.remote),
 				},
 			); err != nil {

internal/backend/remote/testdata/variables/main.tf

@@ -0,0 +1,8 @@
+variable "key1" {
+}
+
+variable "key2" {
+}
+
+variable "key3" {
+}

internal/cloud/backend.go

@@ -601,28 +601,10 @@ func (b *Cloud) StateMgr(name string) (statemgr.Full, error) {
 
 // Operation implements backend.Enhanced.
 func (b *Cloud) Operation(ctx context.Context, op *backend.Operation) (*backend.RunningOperation, error) {
-	name := op.Workspace
-
 	// Retrieve the workspace for this operation.
-	w, err := b.client.Workspaces.Read(ctx, b.organization, name)
+	w, err := b.fetchWorkspace(ctx, b.organization, op.Workspace)
 	if err != nil {
-		switch err {
-		case context.Canceled:
-			return nil, err
-		case tfe.ErrResourceNotFound:
-			return nil, fmt.Errorf(
-				"workspace %s not found\n\n"+
-					"For security, Terraform Cloud returns '404 Not Found' responses for resources\n"+
-					"for resources that a user doesn't have access to, in addition to resources that\n"+
-					"do not exist. If the resource does exist, please check the permissions of the provided token.",
-				name,
-			)
-		default:
-			return nil, fmt.Errorf(
-				"Terraform Cloud returned an unexpected error:\n\n%s",
-				err,
-			)
-		}
+		return nil, err
 	}
 
 	// Terraform remote version conflicts are not a concern for operations. We
@@ -969,6 +951,33 @@ func isLocalExecutionMode(execMode string) bool {
 	return execMode == "local"
 }
 
+func (b *Cloud) fetchWorkspace(ctx context.Context, organization string, workspace string) (*tfe.Workspace, error) {
+	// Retrieve the workspace for this operation.
+	w, err := b.client.Workspaces.Read(ctx, organization, workspace)
+	if err != nil {
+		switch err {
+		case context.Canceled:
+			return nil, err
+		case tfe.ErrResourceNotFound:
+			return nil, fmt.Errorf(
+				"workspace %s not found\n\n"+
+					"For security, Terraform Cloud returns '404 Not Found' responses for resources\n"+
+					"for resources that a user doesn't have access to, in addition to resources that\n"+
+					"do not exist. If the resource does exist, please check the permissions of the provided token.",
+				workspace,
+			)
+		default:
+			err := fmt.Errorf(
+				"Terraform Cloud returned an unexpected error:\n\n%s",
+				err,
+			)
+			return nil, err
+		}
+	}
+
+	return w, nil
+}
+
 func (wm WorkspaceMapping) tfeTags() []*tfe.Tag {
 	var tags []*tfe.Tag
 

internal/cloud/backend_context.go

@@ -5,8 +5,9 @@ import (
 	"fmt"
 	"log"
 
-	tfe "github.com/hashicorp/go-tfe"
 	"github.com/hashicorp/hcl/v2"
+
+	tfe "github.com/hashicorp/go-tfe"
 	"github.com/hashicorp/hcl/v2/hclsyntax"
 	"github.com/hashicorp/terraform/internal/backend"
 	"github.com/hashicorp/terraform/internal/configs"
@@ -97,21 +98,34 @@ func (b *Cloud) LocalRun(op *backend.Operation) (*backend.LocalRun, statemgr.Ful
 			return nil, nil, diags
 		}
 
-		log.Printf("[TRACE] cloud: retrieving variables from workspace %s/%s (%s)", remoteWorkspaceName, b.organization, remoteWorkspaceID)
-		tfeVariables, err := b.client.Variables.List(context.Background(), remoteWorkspaceID, tfe.VariableListOptions{})
-		if err != nil && err != tfe.ErrResourceNotFound {
-			diags = diags.Append(fmt.Errorf("error loading variables: %w", err))
+		// Retrieve the workspace for this operation.
+		w, err := b.fetchWorkspace(context.Background(), b.organization, op.Workspace)
+		if err != nil {
+			diags = diags.Append(fmt.Errorf("error loading workspace: %w", err))
 			return nil, nil, diags
 		}
-
-		if tfeVariables != nil {
-			if op.Variables == nil {
-				op.Variables = make(map[string]backend.UnparsedVariableValue)
+		if isLocalExecutionMode(w.ExecutionMode) {
+			log.Printf("[TRACE] skipping retrieving variables from workspace %s/%s (%s), workspace is in Local Execution mode", remoteWorkspaceName, b.organization, remoteWorkspaceID)
+		} else {
+			log.Printf("[TRACE] cloud: retrieving variables from workspace %s/%s (%s)", remoteWorkspaceName, b.organization, remoteWorkspaceID)
+			tfeVariables, err := b.client.Variables.List(context.Background(), remoteWorkspaceID, tfe.VariableListOptions{})
+			if err != nil && err != tfe.ErrResourceNotFound {
+				diags = diags.Append(fmt.Errorf("error loading variables: %w", err))
+				return nil, nil, diags
 			}
-			for _, v := range tfeVariables.Items {
-				if v.Category == tfe.CategoryTerraform {
-					op.Variables[v.Key] = &remoteStoredVariableValue{
-						definition: v,
+
+			if tfeVariables != nil {
+				if op.Variables == nil {
+					op.Variables = make(map[string]backend.UnparsedVariableValue)
+				}
+
+				for _, v := range tfeVariables.Items {
+					if v.Category == tfe.CategoryTerraform {
+						if _, ok := op.Variables[v.Key]; !ok {
+							op.Variables[v.Key] = &remoteStoredVariableValue{
+								definition: v,
+							}
+						}
 					}
 				}
 			}

internal/cloud/backend_context_test.go

@@ -2,6 +2,7 @@ package cloud
 
 import (
 	"context"
+	"reflect"
 	"testing"
 
 	tfe "github.com/hashicorp/go-tfe"
@@ -13,6 +14,8 @@ import (
 	"github.com/hashicorp/terraform/internal/initwd"
 	"github.com/hashicorp/terraform/internal/states/statemgr"
 	"github.com/hashicorp/terraform/internal/terminal"
+	"github.com/hashicorp/terraform/internal/terraform"
+	"github.com/hashicorp/terraform/internal/tfdiags"
 	"github.com/zclconf/go-cty/cty"
 )
 
@@ -233,3 +236,220 @@ func TestRemoteContextWithVars(t *testing.T) {
 		})
 	}
 }
+
+func TestRemoteVariablesDoNotOverride(t *testing.T) {
+	catTerraform := tfe.CategoryTerraform
+
+	varName1 := "key1"
+	varName2 := "key2"
+	varName3 := "key3"
+
+	varValue1 := "value1"
+	varValue2 := "value2"
+	varValue3 := "value3"
+
+	tests := map[string]struct {
+		localVariables    map[string]backend.UnparsedVariableValue
+		remoteVariables   []*tfe.VariableCreateOptions
+		expectedVariables terraform.InputValues
+	}{
+		"no local variables": {
+			map[string]backend.UnparsedVariableValue{},
+			[]*tfe.VariableCreateOptions{
+				{
+					Key:      &varName1,
+					Value:    &varValue1,
+					Category: &catTerraform,
+				},
+				{
+					Key:      &varName2,
+					Value:    &varValue2,
+					Category: &catTerraform,
+				},
+				{
+					Key:      &varName3,
+					Value:    &varValue3,
+					Category: &catTerraform,
+				},
+			},
+			terraform.InputValues{
+				varName1: &terraform.InputValue{
+					Value:      cty.StringVal(varValue1),
+					SourceType: terraform.ValueFromInput,
+					SourceRange: tfdiags.SourceRange{
+						Filename: "",
+						Start:    tfdiags.SourcePos{Line: 0, Column: 0, Byte: 0},
+						End:      tfdiags.SourcePos{Line: 0, Column: 0, Byte: 0},
+					},
+				},
+				varName2: &terraform.InputValue{
+					Value:      cty.StringVal(varValue2),
+					SourceType: terraform.ValueFromInput,
+					SourceRange: tfdiags.SourceRange{
+						Filename: "",
+						Start:    tfdiags.SourcePos{Line: 0, Column: 0, Byte: 0},
+						End:      tfdiags.SourcePos{Line: 0, Column: 0, Byte: 0},
+					},
+				},
+				varName3: &terraform.InputValue{
+					Value:      cty.StringVal(varValue3),
+					SourceType: terraform.ValueFromInput,
+					SourceRange: tfdiags.SourceRange{
+						Filename: "",
+						Start:    tfdiags.SourcePos{Line: 0, Column: 0, Byte: 0},
+						End:      tfdiags.SourcePos{Line: 0, Column: 0, Byte: 0},
+					},
+				},
+			},
+		},
+		"single conflicting local variable": {
+			map[string]backend.UnparsedVariableValue{
+				varName3: testUnparsedVariableValue{source: terraform.ValueFromNamedFile, value: cty.StringVal(varValue3)},
+			},
+			[]*tfe.VariableCreateOptions{
+				{
+					Key:      &varName1,
+					Value:    &varValue1,
+					Category: &catTerraform,
+				}, {
+					Key:      &varName2,
+					Value:    &varValue2,
+					Category: &catTerraform,
+				}, {
+					Key:      &varName3,
+					Value:    &varValue3,
+					Category: &catTerraform,
+				},
+			},
+			terraform.InputValues{
+				varName1: &terraform.InputValue{
+					Value:      cty.StringVal(varValue1),
+					SourceType: terraform.ValueFromInput,
+					SourceRange: tfdiags.SourceRange{
+						Filename: "",
+						Start:    tfdiags.SourcePos{Line: 0, Column: 0, Byte: 0},
+						End:      tfdiags.SourcePos{Line: 0, Column: 0, Byte: 0},
+					},
+				},
+				varName2: &terraform.InputValue{
+					Value:      cty.StringVal(varValue2),
+					SourceType: terraform.ValueFromInput,
+					SourceRange: tfdiags.SourceRange{
+						Filename: "",
+						Start:    tfdiags.SourcePos{Line: 0, Column: 0, Byte: 0},
+						End:      tfdiags.SourcePos{Line: 0, Column: 0, Byte: 0},
+					},
+				},
+				varName3: &terraform.InputValue{
+					Value:      cty.StringVal(varValue3),
+					SourceType: terraform.ValueFromNamedFile,
+					SourceRange: tfdiags.SourceRange{
+						Filename: "fake.tfvars",
+						Start:    tfdiags.SourcePos{Line: 1, Column: 1, Byte: 0},
+						End:      tfdiags.SourcePos{Line: 1, Column: 1, Byte: 0},
+					},
+				},
+			},
+		},
+		"no conflicting local variable": {
+			map[string]backend.UnparsedVariableValue{
+				varName3: testUnparsedVariableValue{source: terraform.ValueFromNamedFile, value: cty.StringVal(varValue3)},
+			},
+			[]*tfe.VariableCreateOptions{
+				{
+					Key:      &varName1,
+					Value:    &varValue1,
+					Category: &catTerraform,
+				}, {
+					Key:      &varName2,
+					Value:    &varValue2,
+					Category: &catTerraform,
+				},
+			},
+			terraform.InputValues{
+				varName1: &terraform.InputValue{
+					Value:      cty.StringVal(varValue1),
+					SourceType: terraform.ValueFromInput,
+					SourceRange: tfdiags.SourceRange{
+						Filename: "",
+						Start:    tfdiags.SourcePos{Line: 0, Column: 0, Byte: 0},
+						End:      tfdiags.SourcePos{Line: 0, Column: 0, Byte: 0},
+					},
+				},
+				varName2: &terraform.InputValue{
+					Value:      cty.StringVal(varValue2),
+					SourceType: terraform.ValueFromInput,
+					SourceRange: tfdiags.SourceRange{
+						Filename: "",
+						Start:    tfdiags.SourcePos{Line: 0, Column: 0, Byte: 0},
+						End:      tfdiags.SourcePos{Line: 0, Column: 0, Byte: 0},
+					},
+				},
+				varName3: &terraform.InputValue{
+					Value:      cty.StringVal(varValue3),
+					SourceType: terraform.ValueFromNamedFile,
+					SourceRange: tfdiags.SourceRange{
+						Filename: "fake.tfvars",
+						Start:    tfdiags.SourcePos{Line: 1, Column: 1, Byte: 0},
+						End:      tfdiags.SourcePos{Line: 1, Column: 1, Byte: 0},
+					},
+				},
+			},
+		},
+	}
+
+	for name, test := range tests {
+		t.Run(name, func(t *testing.T) {
+			configDir := "./testdata/variables"
+
+			b, bCleanup := testBackendWithName(t)
+			defer bCleanup()
+
+			_, configLoader, configCleanup := initwd.MustLoadConfigForTests(t, configDir)
+			defer configCleanup()
+
+			workspaceID, err := b.getRemoteWorkspaceID(context.Background(), testBackendSingleWorkspaceName)
+			if err != nil {
+				t.Fatal(err)
+			}
+
+			streams, _ := terminal.StreamsForTesting(t)
+			view := views.NewStateLocker(arguments.ViewHuman, views.NewView(streams))
+
+			op := &backend.Operation{
+				ConfigDir:    configDir,
+				ConfigLoader: configLoader,
+				StateLocker:  clistate.NewLocker(0, view),
+				Workspace:    testBackendSingleWorkspaceName,
+				Variables:    test.localVariables,
+			}
+
+			for _, v := range test.remoteVariables {
+				b.client.Variables.Create(context.TODO(), workspaceID, *v)
+			}
+
+			lr, _, diags := b.LocalRun(op)
+
+			if diags.HasErrors() {
+				t.Fatalf("unexpected error\ngot:  %s\nwant: <no error>", diags.Err().Error())
+			}
+			// When Context() succeeds, this should fail w/ "workspace already locked"
+			stateMgr, _ := b.StateMgr(testBackendSingleWorkspaceName)
+			if _, err := stateMgr.Lock(statemgr.NewLockInfo()); err == nil {
+				t.Fatal("unexpected success locking state after Context")
+			}
+
+			actual := lr.PlanOpts.SetVariables
+			expected := test.expectedVariables
+
+			for expectedKey := range expected {
+				actualValue := actual[expectedKey]
+				expectedValue := expected[expectedKey]
+
+				if !reflect.DeepEqual(*actualValue, *expectedValue) {
+					t.Fatalf("unexpected variable '%s'\ngot:  %v\nwant: %v", expectedKey, actualValue, expectedValue)
+				}
+			}
+		})
+	}
+}

internal/cloud/testdata/variables/main.tf

@@ -0,0 +1,8 @@
+variable "key1" {
+}
+
+variable "key2" {
+}
+
+variable "key3" {
+}