Hey @jowilf,
I just ran into this issue today. I'm not sure if you still need a solution, but in case anyone else hits this thread. Here's what worked for me.
log into your iCloud account here as @danwwright suggested:
https://appleid.apple.com/#!&page=signin
if you have the 2 step verification code, you'll need to enter it after you log in. I had mine sent via text
once you're in, scroll down to the "Security" section. Here you can either turn off "TWO-FACTOR AUTHENTICATION" or just generate a password under "APP-SPECIFIC PASSWORDS".
For me, I just generated a one time password. This is the password I used when I was setting up the iCloud account through an app called "BlueMail" but I would think you could also set this up through the native gmail app.
After entering that generated password, everything authenticated perfectly fine. I didn't have any other issue with the setup.
Credit: I found this solution over on Reddit, here's the link to the thread below.
https://www.reddit.com/r/GooglePixel/comments/5kfjl6/setting_up_icloud_email_on_the_new_gmail_app/