Governments should stick to established rules of trade and avoid escalating disputes if they want to safeguard economic growth and protect jobs, the OECD said on Tuesday.
But in the wake of U.S. tax cuts unveiled by Mr Trump and the threat of a trade war between the United States and the European Union over steel and aluminium tariffs, the OECD has warned the global economy is at risk.
The Canadian economy will grow even faster than previously expected this year, according to the OECD, as strong global growth spurs investment and trade.
The Outlook underlines the boost to short-term growth expected from new tax reductions and expected spending increases in the United States and expected fiscal stimulus in Germany, but also points out a number of financial sector risks and vulnerabilities, as well as those posed by a rise in protectionism.
World growth was 3.7 percent in 2017.
"Structural reforms should be revived, seizing the opportunity of the stronger economy to help secure a more robust recovery of productivity, investment and living standards", the report said. Fiscal easing in Germany's coalition agreement was seen lifting growth in the euro zone's biggest economy to 2.4 per cent this year (+0.1 percentage point) and 2.2 per cent in 2019 (+0.3).
It also raised its Canadian growth outlook for next year to 2.0 per cent compared with its forecast in November for 1.9 per cent.
Globally, the OECD expects a modest increase in inflation amid tightening labor markets, which will reduce dependence on accommodative monetary policy. Countries should rely on collective solutions like the Global Forum on Steel Excess Capacity to address specific issues.
In an update to its forecasts, it said that preserving "the rules-based worldwide system is essential to prevent the longer-term harm to growth prospects that could arise from a retreat from open markets".
French growth for this year is set to hit an 11-year high of 2.2% but will decrease to 1.9% in 2019.
The OECD stressed that the world economy would continue to strengthen in 2018 and 2019.