Incorrect type inference when using generics of "union" TypeVars

from typing import MutableSet, Sequence, TypeVar

T = TypeVar('T', str, Sequence[str])

class CustomSet(MutableSet[T]):
    def add(self, value: T) -> None:
        pass

foo = CustomSet()
foo.add(('a', 'b'))

mypy 0.740 says: error: Argument 1 to "add" of "CustomSet" has incompatible type "Tuple[str, str]"; expected "str"

There's seemingly nothing I can do to get mypy to handle this pattern correctly. If I try explicitly specifying the type of foo, it just complains that the assignment to it is incompatible.

Start with the minimal CustomSet and TypeVar reproduction in the issue, then trace mypy's generic type inference for the call to CustomSet.add. Confirm the behavior with a focused type-checking test based on the example; done means the tuple argument is inferred and accepted without an incompatible explicit annotation.