How to remove .Trash folder from iCloud?

Golden Rule: Don't play with .Trash folders. Leave them alone.

The way macOS handles the myriad Trash folders right across your computer is not to be played with. Every user has one, every drive has one, local or remote mounted, every iCloud sync account has one, the system itself has one.
Don't touch. Consider them 'voodoo'.

The .Trash in your iCloud Drive only stores the trash of your iCloud Drive, meaning if you delete a file/folder in iCloud, it will be moved to .Trash, and finally be deleted once you empty the trash on any device that syncs with iCloud Drive.

Files you delete on your Mac that are not in iCloud Drive will not be moved (and therefor uploaded) to your iCloud Drives .Trash folder (instead they land in the appropriate .Trash such as the one in your user folder (~/.Trash)).