[BUG] Environment variables expand to empty strings when used as command arguments in Bash tool

Preflight Checklist

• [x] I have searched existing issues and this hasn't been reported yet
• [x] This is a single bug report (please file separate reports for different bugs)
• [x] I am using the latest version of Claude Code

What's Wrong?

Environment variables are successfully loaded into Claude Code's Bash tool environment (confirmed via env | grep), but they expand to empty strings when used as command arguments.

What Should Happen?

Variables should expand to their values when used as command arguments, just as they do in direct echo statements, subshells, and new bash processes.

Error Messages/Logs

Steps to Reproduce

1. Set environment variables in shell snapshot (e.g., via .zshenv)
2. Verify variable is loaded: env | grep MY_API_KEY (shows correct value)
3. Try using in command: some-cli --api-key "$MY_API_KEY" --action list
4. Observe with debugging: set -x; some-cli --api-key "$MY_API_KEY"
5. See output shows: +(eval):1> some-cli --api-key '' --action list

Claude Model

Sonnet (default)

Is this a regression?

I don't know

Last Working Version

_No response_

Claude Code Version

2.0.2 (Claude Code)

Platform

Anthropic API

Operating System

macOS

Terminal/Shell

Other

Additional Information

Variables work correctly in:

• echo "$MY_VAR"
• $(echo $MY_VAR)
• bash -c 'echo "$MY_VAR"'