Prime Minister Justin Trudeau has made Chrystia Freeland the new foreign affairs minister, giving her total control of U.S. relations and the challenge of stickhandling the America-first trade policy of incoming president Donald Trump.

Mr. Trudeau shuffled his cabinet Tuesday in a move that saw him demote underperformers and promote a trio of rookie MPs while ushering out some of the Liberal old guard, including former Liberal leader Stéphane Dion.

Ms. Freeland, who takes over from Mr. Dion, will become one of the most powerful foreign affairs ministers in recent times. Her duties will include not only international affairs but the whole gamut of U.S. trade policy including the softwood lumber dispute and possible renegotiation of the 1994 North America free-trade agreement.

“We know full well that Mr. Trump wants to talk trade and always talks about economic growth and job creation,” Mr. Trudeau told reporters. “It makes sense if the person who is responsible for foreign relations with the United States also has the ability and the responsibility to engage with issues such as NAFTA and the broad range of trade issues that we will be facing.”

Ms. Freeland, who headed a cabinet committee on Canada-U.S. relations as international trade minister, said she has already begun to lay the groundwork for personal relationships with the incoming Trump administration. There have been phone discussions and the sharing of e-mails with senior officials such Jared Kushner, the president-elect’s son-in-law, who has been given special responsibility for trade.

Ms. Freeland’s replacement at International Trade is Quebec MP François-Philippe Champagne, an experienced trade lawyer who was parliamentary secretary to the finance minister. In his new portfolio, he was stripped of any trade dealings with the United States.

But Mr. Trudeau said Mr. Champagne will have his work cut out for him in negotiating new trade deals with China and Japan and overseeing the implementation of the Canada-European Union free trade deal.

Ms. Freeland, who has been banned from Russia for her strong support of Ukraine, is the first woman to be the top diplomat since Barbara McDougall held the job from 1991-93. Mr. Trudeau played down the significance of Ms. Freeland being on Russia’s retaliatory list after Canada imposed sanctions in 2014.

“Chrystia Freeland is an extremely strong member of the team. Her ability to deal with multiple situations around the world was well demonstrated in her tremendous success in negotiating the Canada-Europe trade agreement,” Mr. Trudeau said. “As for how she gets along with Russia, well, she speaks fluent Russian.”

Mr. Dion and Liberal veteran John McCallum are leaving cabinet. Mr. Dion was swept out of the foreign affairs portfolio and will likely be sent as ambassador to the European Union, while Mr. McCallum will go to China to pursue free trade as Canada’s ambassador there.

“We needed a very senior voice in China especially because we are launching exploratory trade talks,” a senior official said.

The immigration ministry, formerly under Mr. McCallum, will be taken over by Toronto lawyer Ahmed Hussen, who came to Canada as a teenaged refugee from Somalia.

Mr. Dion, who was judged to be too prickly to handle the U.S. file, was said to be unhappy with being dropped from cabinet and is pondering with his family whether to accept the diplomatic posting. He announced Tuesday that he plans to leave active politics.

“I have offered him a very important senior position and it is something that is going to be key for me in the coming years,” Mr. Trudeau said. “He is rightly taking a moment to consider what his future service will look like.”

Ms. Freeland’s promotion and that of Mr. Champagne, who has an outgoing personality and deep experience on trade issues, are seen as an attempt by the Prime Minister to prepare for Mr. Trump’s focus on protectionism while looking for newer trade opportunities abroad.

William Browder, a wealthy American financier and close friend of Ms. Freeland, said the new foreign minister brings a wealth of talent to the job that should help her in dealing with the Trump administration. She worked as a senior economics writer in the United Kingdom, Russia and New York, where she knows many influential Wall Street players.

“America first means Canada second and Mr. Trudeau needs someone who can very delicately manoeuvre around that so that there is no major impact on Canadian business,” Mr. Browder said in an interview. “She is very accomplished, very smart and extremely personable. Those are good attributes for a foreign affairs minister.”

However, Mr. Browder expressed hope that she would also support his international efforts to have Canada adopt a U.S.-style Magnitsky Act to punish Russian human-rights abusers. It is too early to determine if Ms. Freeland’s icy relationship with Moscow will offend President Trump, who has promised to develop a positive relationship with Russian President Vladimir Putin.

“I have a deep love for the Russian language and Russian culture and I am very supportive of this government’s view that it is important to engage with all countries and that includes Russia,” Ms. Freeland told reporters.

A senior official said Ms. Freeland did meet President Putin at Asia-Pacific Economic Co-operation meetings last year, and the government is confident she can work positively with the Kremlin.

The cabinet shuffle rewarded strong performers and demoted weak ministers who struggled in their jobs.

Mr. Trudeau fired MaryAnn Mihychuk as employment and labour minister. There had been complaints about the way she treated staff, sources said. She was replaced by Patty Hajdu, a promotion from the status of women portfolio.

Karina Gould, who was parliamentary secretary to the international development minister, will take over the democratic institutions portfolio from Maryam Monsef, who was demoted to status of women. Ms. Monsef was widely criticized for the way she handled the government’s plans to change the voting system.

The shuffle comes as Mr. Trudeau embarks on a cross-country tour to meet Canadians in town halls and coffee shops after being heavily criticized in Parliament for attending elite cash-for-access cash fundraisers at the homes of wealthy donors.

“We know that the Prime Minister desperately wants to change the channel on his cash-for-access dinners, outlandish holidays and out-of-control spending. However shuffling the cabinet deck by replacing a few ministers simply won’t do it,” Conservative MP Candice Bergen said.

The Globe and Mail
Published Tuesday, Jan. 10, 2017 9:20AM EST
Last updated Wednesday, Jan. 11, 2017 9:25AM EST