Argument "key" to "sorted" has incompatible type "Callable…"

Bug Report

I believe that I've found a bug in mypy, the following MRE should as far as I can tell not result in any typing errors at all, but it reports an error (and I've found two simple workarounds for which no error is reported, strengthening my belief that this is a bug and not intended behaviour).

To Reproduce

#!/usr/bin/python3

from collections.abc import Iterable
from typing import cast


def unproblematic(iter: Iterable[int]) -> None:
    print(iter)


def problematic(iter: Iterable[int | str]) -> None:
    print(iter)


def key(item: int) -> int:
    return -item


def main() -> None:
    items: list[int] = [3, 4, 1, 2]

    unproblematic(sorted(items, key=key))  # Works.
    problematic(sorted(items, key=key))  # Fails mypy arg-type.

    workaround = sorted(items, key=key)
    problematic(workaround)  # Works.

    problematic(cast(Iterable[int], sorted(items, key=key)))  # Works.


if __name__ == '__main__':
    main()

Actual Behavior

$ mypy mre.py
mre.py:23: error: Argument "key" to "sorted" has incompatible type "Callable[[int], int]"; expected "Callable[[int | str], SupportsDunderLT[Any] | SupportsDunderGT[Any]]"  [arg-type]

Your Environment

$ mypy --version                
mypy 1.16.0 (compiled: yes)
$ python3 --version
Python 3.13.3

(If anyone can't trivially reproduce this, I'd be happy to provide more details about my environment.)

Start by reproducing the report from the MRE in mre.py with mypy 1.16.0 and Python 3.13.3, then compare the direct sorted(items, key=key) call with the two workarounds. Done means the direct call no longer reports the incompatible key argument while the example remains correctly typed.