Current Harmonics are caused by non-linear loads such as thyristor drives, induction furnaces, etc. The effect of these loads is the distortion of the fundamental sinusoidal current waveform alternating at 50Hz. Current Harmonics affect the system by loading the distribution system as the waveforms of the other frequencies use up capacity without contributing any power to the load. They also contribute the Copper losses I2Z losses in the system.
Besides, Harmonic currents load the power sources such as transformers and alternators. However, current harmonics do not affect the remainder of the loads in the system which are linear. They only impact the loads which are causing them i.e non-linear loads.
Voltage Harmonics are caused by the current harmonics which distort the voltage waveform. These voltage harmonics affect the entire system not just the loads which are causing them. Their impact depends on the distance of the load causing the harmonics from the power source. If other harmless loads are connected between the source and harmonics causing loads, these innocent loads will also be affected by the harmonics.
Hence, one way of mitigating the effect of harmonics is by connecting the harmonics-causing loads as close to the source as possible in a separate feeder. Another method is by using an isolating transformers between the problem loads and the rest of the distribution system
See also:
Basics of Harmonics
Harmonic Resonance