Short answer: No.
Long answer:
First of all, what do you mean by "Damascus steel?" There are at least two different processes that are called by that name. The original meaning meant a type of crucible steel imported from India into the Middle East (hence the term "Damascus"). The second meaning, most commonly used today, is a laminated blade made up of different alloys. There is also such a thing as "pattern-welding," but the term properly applies to Early Medieval blades made up of multiple bars of twisted, layered metal - a rather different process than modern layered Damascus.
Of these three meanings, the only one that might come close to being made in Colonial America is crucible steel, and I am not sure how common that might have been or what the differences between Wootz/Damascus and 18th century crucible steel are.
In any case, locally-made knives would have been extremely rare (though not non-existent). Simple butcher knives were imported by the barrel-full into the colonies and were available quite cheap - less than the cost of a pound of gunpowder, IIRC. If you are really interested in what your grandfather (just how old are you, anyway?) carried during the Revolution, then a butcher knife or even a big folding knife is the most likely option.
As a matter of fact, I don't believe that there is much evidence for the frontiersmen carrying unusually big knives during the 18th century at all - none of the eye-witness descriptions of Revolutionary riflemen mention knives as something unusual in the way that hunting-shirts, rifles, shot pouches, rifles, tomahawks, etc, are mentioned. While the Indians referred to the Virginian as “Long Knives,” that is an ethnic name, not a description, and I think it most likely refers to swords.
If you just have to have a long, blacksmith-made knife, than there is a very small amount of evidence for such things. There is exactly one reference to swords and butcher knives made out of saw blades in James Collin’s autobiography, though I believe he is mostly talking about swords. Note that his troop of partisans were forced to this by war-induced shortages, not by poverty. Likewise, there is the Fort Ticonderoga knife, evidently lost while digging earthworks in 1777 or 1778 (I forget which) - this was probably a case where someone wanted something that wasn’t available commercially rather than being too poor to buy a factory made butcher knife. There is a knife with an antler handle found in Philadelphia in a scabbard dated 1759. Gordon Minnis in American Primitive Knives shows a medium sized knife with a pistol-grip handle that might be 18th century, and Madison Grant shows two smallish (under 5”) blades that might be 18th century as well, one found at Paoli and one with a lion head on the hilt. Note that all these knives have curved blades, and except for Minnis’ pistol-gripped example and possibly the “1759” example (the tip of which is hidden in the only available picture) all are banana shaped - an upswept blade combined with a spear-point tip (yes, the Fort Ti blade has a dropped tip, it is just pretty subtle).
You also might think about a cut-down sword.
