Wiring a bilge pump with different size wires
The big deal with DC is the distance using the larger wire as the feeder will reduce the voltage drop. You will be fine using the 16 awg wire in the fuse holder with the 12 awg. Suggestion if you use crimp connectors fill them with silicon sealer , even bathroom calking will work then stuff your wires in and crimp this will make the connections moisture proof and anyone that works on marine electrical knows how the connections corrode away if not sealed. I have used this trick on my boats regularly used in saltwater and have never had a bad splice even a decade later.