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python -c "import tarfile; tarfile.open(u'hello.tar.gz', 'w|gz')"
produces
Traceback (most recent call last):
 File "<string>", line 1, in <module>
 File "C:\Users\jaraco\projects\public\cpython\Lib\tarfile.py", line 1687, in open
 _Stream(name, filemode, comptype, fileobj, bufsize),
 File "C:\Users\jaraco\projects\public\cpython\Lib\tarfile.py", line 431, in __init__
 self._init_write_gz()
 File "C:\Users\jaraco\projects\public\cpython\Lib\tarfile.py", line 459, in _init_write_gz
 self.__write(self.name + NUL)
 File "C:\Users\jaraco\projects\public\cpython\Lib\tarfile.py", line 475, in __write
 self.buf += s
UnicodeDecodeError: 'ascii' codec can't decode byte 0x8b in position 1: ordinal not in range(128)
Remove the compression ('|gz') or remove the unicode name or run under Python 3 and the command completes without error.
The error does not occur under Python 3 (even with non-ascii characters), so it should be possible to create a tarfile with a unicode filename on Python 2.7.
This failure is the underlying cause of #11638.