Why can't `-C /` be used in a separate file when invoking tar?

I am trying to use tar to archive some files and send them to a remote server over ssh. I want to specify the files to archive in a separate file using the -T option. The following command does not work.

$ tar -cf - -T files | ssh servo "cat > myarchive.tar"

files

-C /
etc/

The error I get back is

tar: files:1: unrecognized option
tar: etc: Cannot stat: No such file or directory
tar: Exiting with failure status due to previous errors

If I instead define files as

-C /etc
X11/

and then run the same command, I get the desired result of creating an archive on the remote server.

When I specify -C / directly as an argument to tar and not in files, I also get the desired result.

Why can't I specify -C / in files?

Edit: Using GNU tar version 1.34

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