(Reuters) -Rivian said on Monday that it will invest $120 million to bring its key parts suppliers near its plant in Illinois, as the electric vehicle-maker seeks to lower the impact of U.S. President Donald Trump's tariffs on Mexico and Canada.

The supplier park near Rivian's facility at Normal, Illinois will also reduce shipping, logistics and warehousing costs, while adding hundreds of jobs in the next two years, including about 100 directly by the company, it said.

"This will be a key enabler to increasing production at the plant in 2026 when we start to build R2 in addition to R1 and our commercial vans," CEO RJ Scaringe said in a blog.

Rivian builds all its electric vehicles at the Normal plant, including its flagship R1S SUVs and R1T pickup trucks. The production of its less expensive R2 is expected to begin next year.

The company in April reported a 36% decline in first-quarter deliveries. CFO Claire McDonough had said in February that vehicle deliveries would be lower this year due to soft demand, partially because of the impact of fires in Los Angeles.

Demand could be further pressured as U.S. President Donald Trump's tariff policies are expected to accelerate inflation and increase prices of automobiles, making consumers wary of committing to big purchases.

Last week, Trump signed a pair of orders to soften the blow of his auto tariffs, with a mix of credits and relief from other levies on materials.