OTTAWA, Jan 10 (Reuters) - Trade Minister Chrystia Freeland will become Canada's foreign affairs minister in a planned cabinet shuffle, said a person familiar with the change, putting a Russia critic on the front lines of working with the incoming U.S. Trump administration.

The change is part of a wider shuffle of Prime Minister Justin Trudeau's inner circle as he tries to position Canada for a new relationship with its largest trading partner and demote underperformers in his 14-month old Liberal government.

The shuffle also includes the promotion of a Somali-Canadian who came to Canada as a refugee to immigration minister and the departure of two of Trudeau's most experienced ministers to diplomatic posts, local media reported.

The moves, to be announced at 2 p.m. ET (1900 GMT) on Tuesday, comes ahead of the Jan. 20 inauguration of Republican President-elect Donald Trump and shortly after Trudeau's senior staff met with Trump's transition team.

Freeland, an author and former reporter who has been a top performer in Trudeau's cabinet, would replace Foreign Affairs Minister Stephane Dion, the source told Reuters.

A Freeland spokesman could not immediately be reached for comment.

The shuffle will be the first major change Trudeau has made to the cabinet he appointed after leading his party to an election victory in October 2015.

Canada's relationship with its neighbor to the south could be tested in coming years, with Trump promising to renegotiate the 1994 North American Free Trade Agreement aimed at removing tariff barriers between Canada, Mexico and the United States.

The appointment of Freeland, who is of Ukrainian descent, to the foreign affairs file could be thorny as she has been a harsh critic of Vladimir Putin, the Russian president whom Trump has repeatedly praised.

Moscow banned Freeland in 2014 as part of a series of retaliatory sanctions against Canadian officials, a move Freeland wrote about in an article entitled "My Ukraine, and Putin's big lie," in Quartz magazine in 2015.

Ottawa had earlier blacklisted many Russian officials to punish the country for its annexation of Crimea.

A Liberal insider said Trudeau favored Freeland because of her ability to build bridges, citing her efforts in reaching the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union last year.

"She is able to sit down with people on all parts of the political spectrum and find common ground. She did that on CETA and is going to be able to do that with Republicans," said the insider, who declined to be identified ahead of the announcement.

"The message we ran on, that she believes in, helping the middle class and reducing inequality, is the message that the Trump guys have been pushing as well. So she'll be able to connect to them," the insider said.

Before running for election in the Canadian parliament, Freeland worked for Reuters, a unit of Thomson Reuters.

Local media said Dion will be named an ambassador in Europe while Immigration Minister John McCallum will become ambassador to China and replaced by Ahmed Hussen, a Muslim who came to Canada as a teenaged refugee from war-torn Somalia.

Among other changes, Francois-Philippe Champagne, parliamentary secretary to the finance minister, will become trade minister, the Canadian Broadcasting Corp said. (Reporting by Leah Schnurr and David Ljunggren; Editing by Howard Goller and Alan Crosby)

Source-Thomson Reuters Foundation