In a large bowl, cream together the softened butter, granulated sugar, and powdered sugar until fully mixed.
Add the egg, vanilla extract, and peppermint extract to the butter mixture. Mix until all the wet ingredients are fully incorporated.
In a separate mixing bowl, whisk together the all-purpose flour, baking powder, and salt.
Gradually add the dry ingredients to the butter mixture, mixing well until a dough forms and all the dry ingredients are incorporated.
Divide the dough in half. Leave one half as it is and set it aside. Add a few drops of red gel food coloring to the other half and gently knead until the color is evenly distributed. Add more red gel food coloring as needed to achieve a vibrant red color.
Wrap each dough color in plastic wrap and refrigerate for at least 2 hours.
Preheat the oven to 350º F. Line a baking sheet with parchment paper or silicone mat.
In a small bowl, mix together 2 Tablespoons of granulated sugar and 1 teaspoon of crushed candy canes. Set aside.
Take a rounded teaspoon of dough from each color. Roll each piece into a rope, about 4 or 5 inches long.
Twist the red and white dough ropes together, creating a swirl pattern. Shape the twisted dough into a hook shape and place it onto the prepared baking sheet, leaving about an inch of space between cookies.
Repeat the process with the remaining dough, making 40 cookies in total.
Bake the cookies for 8-10 minutes, or until the edges are just lightly golden.
Immediately sprinkle the warm cookies with the candy cane and sugar mixture, then allow the cookies to cool on the baking sheet for 5 minutes. (Reuse the excess sugar/candy cane mixture on new cookies as they come out of the oven.)
Transfer the cookies to a wire rack or clean towel to cool completely.
Once cooled, enjoy your delicious Peppermint Swirl Cookies. Store them in a sealed container at room temperature for up to a week.