Consider nuclear weapons. About eight or nine armies have that, nearly 100% made in the relevant country... those factories were started with the clear condition that they would produce for the domestic market only, they set their prices accordingly, and it worked.

What doesn't work is encouraging people to invest in arms production and later telling them they cannot export. Doing that may work, but the prohibition often fails. And fairly IMO. Those are long-term investments and it's not fair to change the rules on much shorter notice.