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Mr. Biden vowed to work more closely with Europe, which he has described as a partner in efforts to combat climate change and compete against authoritarian economies like China. But he has been under pressure from American metal manufacturers and labor unions not to entirely remove the trade barriers, which have helped protect the domestic industry from a glut of cheap foreign metal.

The deal marks the final step for the Biden administration in dismantling Mr. Trump’s Trans-Atlantic trade war. In June, U.S. and European officials announced an end to a 17-year dispute over aircraft subsidies given to Airbus and Boeing. In late September, the United States and Europe announced a new partnership for trade and technology, and earlier this month they came to an agreement on global minimum taxes.

Under the new terms, the European Union will be allowed to ship 3.3 million metric tons of steel annually into the United States duty-free, while any volume above that would be subject to a 25 percent tariff, according to people familiar with the arrangement. Products that were granted exclusions from the tariffs this year would also temporarily be exempt.

The agreement will also place restrictions on products that are finished in Europe but use steel from China, Russia, South Korea and other countries. To qualify for duty-free treatment, steel products must be entirely made in the European Union.

Jake Sullivan, the president’s national security adviser, said that the deal removed “one of the biggest bilateral irritants in the U.S.-E.U. relationship.”

Metal unions in the United States praised the deal, which they said would limit European exports to historically low levels. The United States imported 4.8 million metric tons of European steel in 2018, a level that fell to 3.9 million in 2019 and 2.5 million in 2020.

In a statement, Thomas M. Conway, president of the United Steelworkers International, said the arrangement would “ensure U.S. domestic industries remain competitive and able to meet our security and infrastructure needs.”