Chrystia Freeland has been named Canada's new top diplomat, replacing veteran politician Stéphane Dion as foreign affairs minister in Prime Minister Justin Trudeau's first major cabinet shakeup.

Dion, a former Liberal Party leader who served over 20 years in office, is considering an offer from Trudeau to take a diplomatic post after he was dropped from cabinet. 

Trudeau called Dion a longtime friend and colleague who has contributed greatly to public service and the country.

"I have offered him a very important, senior position ... something that is going to be key in the coming years as we move forward, and he is rightly taking a moment to consider what his future service will look like," Trudeau said at a news conference following the swearing-in ceremony for new cabinet ministers.

Sources had told CBC News Dion was offered the job of Canada's ambassador to the European Union and Germany.

While the swearing-in ceremony was still underway at Rideau Hall, the official residence and workplace of the governor general, Dion's office issued a statement wishing Freeland "the best of luck."

But he left his own future unclear.

"Over the last 21 years, I have devoted myself to my riding, to my fellow citizens, to Quebec, to all of Canada, to the role that we must play in the world, and to the Liberal Party of Canada," he wrote.

"Now, I shall deploy my efforts outside active politics. I have enjoyed political life, especially when I was able to make a difference to benefit my fellow citizens. I emerge full of energy ... renewable! But politics is not the only way to serve one's country. Fortunately!"

Trudeau also announced that former immigration minister John McCallum will be Canada's new ambassador to China after a "distinguished career in public service." 

The cabinet refresh injects some youth and retains gender parity, and elevates Canada's first Somalia-born MP to the inner circle. Ahmed Hussen, a lawyer and community activist in the Toronto riding of York South-Weston, was appointed minister of immigration, refugees and citizenship.

Mihychuk shuffled out

MaryAnn Mihychuk was shuffled out of the position of minister of employment, workforce development and labour.

"I'm of course disappointed," she said. "I've always been a strong advocate as a feminist, as a person who fights for jobs. And I'll continue to do that."

Other changes announced today:

  • François-Philippe Champagne becomes minister of international trade.
  • Patty Hajdu moves from status of women to labour.
  • Maryam Monsef transfers from democratic institutions to status of women.
  • Karina Gould named minister of democratic institutions.
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Ahmed Hussen speaks with Prime Minister Justin Trudeau after being sworn in as minister of immigration. (Sean Kilpatrick/Canadian Press)

At age 29, Gould, a former trade and development worker who represents the riding of Burlington, Ont., becomes the youngest female cabinet minister in Canada's history. She was promoted from her previous role as parliamentary secretary to the minister of international development. 

Champagne, a first-term MP for the Quebec riding of Saint-Maurice–Champlain, is a former businessman and lawyer. He was considered a strong performer as parliamentary secretary to Finance Minister Bill Morneau.

McCallum accepts China post

McCallum, 65, served as defence minister under former prime minister Jean Chrétien and presided over the veteran affairs file in former prime minister Paul Martin's cabinet. He led Canada's efforts to bring 39,500 Syrian refugees to Canada.

Today he said he was presented with the offer to represent Canada in Beijing a week ago, and that he was "enthusiastic" to accept.

Dion, 61, held the intergovernmental affairs and environment portfolios under Chrétien and Martin. He also served as Liberal Party leader for two years, a position he held until a failed attempt to lead a coalition government shortly after the party lost 18 seats in a 2008 federal election defeat.

Under Chrétien, Dion was the architect of the Clarity Act, which set out the legal conditions for Quebec sovereignty.

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Karina Gould is sworn in as minister of democratic institutions. (Sean Kilpatrick/Canadian Press)

Monsef, the Ontario MP for Peterborough-Kawartha, has taken criticism for her handling of the electoral reform file, and was forced to apologize last month for accusing MPs on the special committee studying the issue of shirking their duties.

Freeland banned from Russia

Freeland, a former economics journalist, was praised for stickhandling the Canada-European Union free trade agreement, where she gained experience that could be valuable in dealing with the new administration of U.S. president-elect Donald Trump.

She already chairs the cabinet committee responsible for Canada-U.S. relations, and she will retain responsibility for Canada's relationships in Washington as foreign affairs minister.

That role will include managing key U.S. files from her previous trade portfolio, including ongoing softwood lumber negotiations and future talks expected, after Trump is sworn in, to revisit the North American Free Trade Agreement (NAFTA.)

Trade ties with Trump

Trudeau said he is realigning duties to adapt to Trump's approach.

"One of the things we've seen with president-elect Trump is that he very much takes a trade and jobs lens to his engagement with the world in international diplomacy," he said. "And it makes sense for the person who is responsible for foreign relations in the United States to also have the ability and the responsibility to engage with issues such as NAFTA."

Trump's inauguration is Jan. 20.

Another challenge for Freeland will be dealing with Russia. She was among 13 Canadians slapped with retaliatory sanctions by Russian President Vladimir Putin in 2014 that countered Canadian sanctions over aggression in Ukraine and Crimea.

Today, the Russian Embassy in Ottawa confirmed to CBC News that Freeland is still subject to those sanctions, which ban her from travelling to the country.

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Francois-Philippe Champagne is Canada's new minister of international trade. (Adrian Wyld/Canadian Press)

But while her support for Ukraine remains steadfast, Freeland said her deep understanding and love for Russian people and culture make her "well-positioned" to deal with Moscow.

"I am a very strong supporter of our government's view that it is important to engage with all countries around the world very much, including Russia," she said.

Trudeau's cabinet was sworn in just over 14 months ago, but has seen a few changes before today.

Last May, former fisheries minister Hunter Tootoo was dropped from cabinet for personal reasons and replaced by former government House leader Dominic LeBlanc. In a midsummer move, Small Business and Tourism Minister Bardish Chagger was given LeBlanc's House leader duties.

MaryAnn Mihychuk Maryam Monsef Stéphane Dion

MaryAnn Mihychuk, Maryam Monsef and Stéphane Dion were all moved from their current portfolios in Tuesday's cabinet shuffle. Monsef was transferred to the status of women file. (Canadian Press)

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With files from Chris Hall, Janyce McGregor