Change the exception suppression invariant to work backwards:

All the benefits of the approach stay the same, but additionally, for an arbitrary flow pipeline, adding a catch operator that is not triggered will no longer change the type of resulting exception

kotlinx-coroutines-core/common/src/flow/Flow.kt

@@ -133,7 +133,7 @@ import kotlin.coroutines.*
  *
  * When `emit` or `emitAll` throws, the Flow implementations must immediately stop emitting new values and finish with an exception.
  * For diagnostics or application-specific purposes, the exception may be different from the one thrown by the emit operation,
- * but then it will be suppressed, as discussed below.
+ * suppressing the original exception as discussed below.
  * If there is a need to emit values after the downstream failed, please use the [catch][Flow.catch] operator.
  *
  * The [catch][Flow.catch] operator only catches upstream exceptions, but passes
@@ -152,7 +152,9 @@ import kotlin.coroutines.*
  * All exception-handling Flow operators follow the principle of exception suppression:
  *
  * If the upstream flow throws an exception during its completion when the downstream exception has been thrown,
- * the upstream exception becomes superseded and suppressed by the downstream exception.
+ * the downstream exception becomes superseded and suppressed by the upstream exception, being a semantic
+ * equivalent of throwing from `finally` block. Exception-handling operators then ignore this exception,
+ * still following the downstream failure.
  *
  * Failure to adhere to the exception transparency requirement can lead to strange behaviors which make
  * it hard to reason about the code because an exception in the `collect { ... }` could be somehow "caught"

kotlinx-coroutines-core/common/src/flow/operators/Errors.kt

@@ -214,8 +214,7 @@ internal suspend fun <T> Flow<T>.catchImpl(
              * The exception came from the upstream [semi-] independently.
              * For pure failures, when the downstream functions normally, we handle the exception as intended.
              * But if the downstream has failed prior to or concurrently
-             * with the upstream, we forcefully rethrow it, preserving the contextual information and ensuring
-             * that it's not lost.
+             * with the upstream, we forcefully rethrow it, preserving the contextual information and ensuring  that it's not lost.
              */
             if (fromDownstream == null) {
                 return e
@@ -238,12 +237,12 @@ internal suspend fun <T> Flow<T>.catchImpl(
              * ```
              * when *the downstream* throws.
              */
-            if (fromDownstream is CancellationException) {
-                e.addSuppressed(fromDownstream)
-                throw e
-            } else {
+            if (e is CancellationException) {
                 fromDownstream.addSuppressed(e)
                 throw fromDownstream
+            } else {
+                e.addSuppressed(fromDownstream)
+                throw e
             }
         }
     }

kotlinx-coroutines-core/common/test/flow/operators/CatchTest.kt

@@ -160,7 +160,7 @@ class CatchTest : TestBase() {
             throw TestException2()
         }
 
-        assertFailsWith<TestException2>(flow)
+        assertFailsWith<TestException>(flow)
         finish(4)
     }
 

kotlinx-coroutines-core/common/test/flow/operators/RetryTest.kt

@@ -120,7 +120,7 @@ class RetryTest : TestBase() {
             throw TestException2()
         }
 
-        assertFailsWith<TestException2>(flow)
+        assertFailsWith<TestException>(flow)
         finish(4)
     }
 

kotlinx-coroutines-core/jvm/test/exceptions/FlowSuppressionTest.kt

@@ -0,0 +1,50 @@
+/*
+ * Copyright 2016-2021 JetBrains s.r.o. Use of this source code is governed by the Apache 2.0 license.
+ */
+
+package kotlinx.coroutines.exceptions
+
+import kotlinx.coroutines.*
+import kotlinx.coroutines.flow.*
+import org.junit.*
+import org.junit.Test
+import kotlin.test.*
+
+class FlowSuppressionTest : TestBase() {
+    @Test
+    fun testSuppressionForPrimaryException() = runTest {
+        val flow = flow {
+            try {
+                emit(1)
+            } finally {
+                throw TestException()
+            }
+        }.catch { expectUnreached() }.onEach { throw TestException2() }
+
+        try {
+            flow.collect()
+        } catch (e: Throwable) {
+            assertIs<TestException>(e)
+            assertIs<TestException2>(e.suppressed[0])
+        }
+    }
+
+    @Test
+    fun testSuppressionForPrimaryExceptionRetry() = runTest {
+        val flow = flow {
+            try {
+                emit(1)
+            } finally {
+                throw TestException()
+            }
+        }.retry { expectUnreached(); true }.onEach { throw TestException2() }
+
+        try {
+            flow.collect()
+        } catch (e: Throwable) {
+            assertIs<TestException>(e)
+            assertIs<TestException2>(e.suppressed[0])
+
+        }
+    }
+}