diff --git a/compiler/src/dotty/tools/dotc/core/Types.scala b/compiler/src/dotty/tools/dotc/core/Types.scala
index bbec037ebef1..f5e128dd070d 100644
--- a/compiler/src/dotty/tools/dotc/core/Types.scala
+++ b/compiler/src/dotty/tools/dotc/core/Types.scala
@@ -6026,7 +6026,7 @@ object Types {
         case _ =>
           if args.exists(isRange) then
             if variance > 0 then
-              tp.derivedAppliedType(tycon, args.map(rangeToBounds)) match
+              tp.derivedAppliedType(tycon, args.map(rangeToBounds))(using ctx.addMode(Mode.AllowLambdaWildcardApply)) match
                 case tp1: AppliedType if tp1.isUnreducibleWild && ctx.phase != checkCapturesPhase =>
                   // don't infer a type that would trigger an error later in
                   // Checking.checkAppliedType; fall through to default handling instead
diff --git a/tests/pos/16583.scala b/tests/pos/16583.scala
index adf67f5d469a..45410fb9e065 100644
--- a/tests/pos/16583.scala
+++ b/tests/pos/16583.scala
@@ -12,3 +12,27 @@ inline def labels[Labels <: Tuple](using ev: Tuple.Union[Labels] <:< String): Li
 def test = labels[("one", "two", "three")].mkString("<", ", ", ">")
 
 def test2(tup: ("one", "two", "three")) = tup.toList
+
+def toList(x: Tuple): List[Tuple.Union[x.type]] = ???
+def test3[Labels <: Tuple] = toList((???): Labels)
+// Previously would fail with:
+// Found:    List[Tuple.Union[(?1 : Labels)]]
+// Required: List[
+//   Labels match {
+//     case EmptyTuple => Nothing
+//     case h *: t => h | scala.Tuple.Fold[t, Nothing, [x, y] =>> x | y]
+//   }
+// ]
+// Now, both the inferred return type and the type of the right-hand side are List[Any].
+
+type F2[X, Y]
+type F[X] = F2[X, X]
+def toF(x: Any): F[x.type] = ???
+def test4[T] = toF((???): T)
+// Previously would fail with:
+// def test3[T] = toF((???): T)
+//                ^^^^^^^^^^^^^
+//                Found:    F[(?1 : T)]
+//                Required: F2[T, T]
+//                where:    ?1 is an unknown value of type T
+// Now, both the inferred return type and the type of the right-hand side are Any.