Combine 1/2 cup sugar and butter in bowl. Beat at medium speed, scraping bowl often, until creamy. Add egg, milk and vanilla; continue beating until well mixed. Add flour and baking powder; beat, scraping bowl often, until well mixed. Add 2 tablespoons chai mix; knead into dough, using hands, until well mixed.
Divide dough in half; shape each half into 8-inch log. Wrap each in plastic food wrap. Refrigerate 1-2 hours or until firm.
Heat oven to 375°F.
Combine 1/3 cup sugar and remaining chai mix in bowl; set aside.
Cut logs into 1/8-inch slices with sharp knife. Place 1 inch apart onto ungreased cookie sheets. Bake 7-9 minutes or until edges begin to brown. Cool 2 minutes on cookie sheets; remove to cooling rack. Sprinkle cookies with sugar mixture while warm. Cool completely. Sprinkle cookies with sugar mixture again when cooled.
Refrigerating dough before cutting into slices makes it more manageable. It also creates more tender cookies since the dough has to be handled less than room temperature dough.