It's probably not a bad idea. Steel is one of the things that an industrialized country needs to produce to protect its own sovereignty. Letting it shut down and just hope you'll always be able to import enough steel from other countries is a bad long-term strategy. You'd be left unable to fend for yourself.
You aren't going to send your steel navy out when one side can see you from space and you can't, almost regardless of the numbers. Your big army of steel tanks is useless against a bunch of drones directed by distribute satellites.