Correct answer: The GRE tunnel MTU is 1,476.
Generic Routing Encapsulation (GRE) adds 24 bytes to each packet: a 4-byte GRE header and a 20-byte outer IPv4 header. With the default 1,500-byte MTU on the physical links, the IP MTU of the tunnel is 1,476 bytes (1,500 - 24). The ping sends 1,500-byte packets with the DF bit set. These packets are larger than 1,476 bytes and must not be fragmented. So the router drops them and returns an ICMP 'fragmentation needed' message, and the ping fails. The default MTU is 1,500 bytes, not 1,400. The command already sets the DF bit with df-bit. GRE can carry fragmented packets; here the DF bit is what blocks fragmentation. Sources: Cisco TAC 25885, Resolve IPv4 Fragmentation, MTU, MSS, and PMTUD Issues with GRE and IPsec; RFC 2784 section 2.1.