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7 year oldSix Cabinet posts have been shaken up in the reshuffle, with some rookies taking top roles.
Major changes include Chrystia Freeland's move from international trade to foreign affairs.
Immigration and democratic reform portfolios are affected, along with one key diplomatic post.
It is the first major cabinet shuffle since Mr Trudeau took power in November 2015 and comes as Ottawa prepares for a protectionist administration about to take power in the US.
President-elect Donald Trump is to be sworn in on 20 January.
Chrystia Freeland, who helped prevent the collapse of the EU-Canada Comprehensive Economic and Trade Agreement (Ceta) last October, will be one of Canada's main voices on the world stage as new global affairs minister.
She will retain the Canada-US relations file, including trade relations with Canada's largest trading partner.
Ms Freeland has lived in both Russia and the US, and spent time in Moscow as the former bureau chief of the Financial Times. She is known to be well connected in Washington.
While she is also known in Moscow, Ms Freeland does not have the warm relationship her incoming US counterpart Rex Tillerson has with Russian officials.
In fact, she is currently banned from Russia. Ms Freeland, who has been outspoken in her support of Ukraine, was one of 13 Canadian officials and politicians sanctioned by Moscow in 2014 in retaliation for sanctions imposed by Canada over Russia's annexation of Crimea.
Mr Trudeau praised Ms Freeland as an "extremely strong member of the team" and for her handling of the Ceta file, and brushed off any possible tensions with Russia.
"As to how she gets a long with Russia, well, she speaks fluent Russian," he said.
Ms Freeland also waved off her ban from Russia, saying it was an issue for Moscow to tackle.
She is being replaced at international trade by neophyte MP Francois-Philippe Champagne, a trade lawyer, who will work closely with Ms Freeland on a portfolio that includes Ceta and the Trans Pacific Partnership (TPP).
Mr Trump has said he wants to either renegotiate or scrap Nafta altogether and has said he will quit the TPP on his first day in the White House.
Speaking in context of his re-shuffled team, Mr Trudeau noted on Tuesday that "obviously the new administration to the south will offer both opportunities and challenges as well as a shift in global context".
Ms Freeland is replacing Stephane Dion, who announced on Tuesday that he was leaving politics after 21 years. He has been offered an ambassadorial position by the prime minister.
John McCallum, who helped oversee efforts to fast-track 25,000 Syrian refugees into the country, is being shuffled from the immigration portfolio and will become Canada's new ambassador to China.
The veteran politician will help oversee the country's move to deepen economic ties with China, including exploring a possible free trade deal with the Asian nation.
Senior officials in the Trudeau government have been working hard to lay the groundwork for the new relationship between Canada and the US as Mr Trump prepares to replace President Barack Obama.
They have been meeting regularly with members of Mr Trump's advisory team since the presidential election south of the border, and there have been efforts to reach out to lawmakers from the 35 northern US states.
Two of Mr Trudeau's top aides met last week with Mr Trump's chief strategist Steve Bannon and the president-elect's son-in-law, Jared Kushner, according to reports.
Former Prime Minister Brian Mulroney, who helped negotiate Nafta, has also been playing an intermediary role between Ottawa and Washington.
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