As Martin mentioned, this is due to a version problem of the gpg binaries RHEL/CENTOS provides. For this to work, you need to convince emacs that your version is acceptable.
Find the .../share/emacs/27.2/lisp directory and open the epg-config-el.gz file. I found mine by running find-name-dired and searching for *epg-config*. Once opened, change the line from
This is the same question as discussed in https://debbugs.gnu.org/46674
In short: Use Tramp 2.5 from GNU ELPA, and apply in your .emacs
'remote-without-auth-sources '((auth-sources . nil)))
'(:application tramp) 'remote-without-auth-sources)