Limitations of chip and PIN
In the US, credit cards use a magnetic stripe to carry the information that's needed to carry out a credit card purchase. In other parts of the world, more sophisticated cards are used. These so-called "smart cards" actually contain lots of very advanced technology that protects the cryptographic keys that authenticate the card when its used.
If you want to try to find a protected key using advanced tricks like measuring the timing of cryptographic operations or by measuring the power consumed by the card's processor while it's doing a cryptographic operation, for example, then these cards have built-in features to thwart you. They're not perfect, but they're much more secure than cards that use just magnetic stripes are.
If the US credit card market moved to smart cards, how much would it affect the total amount of credit card fraud? It certainly wouldn't eliminate it, because smart cards don't protect against all threats. They do nothing at all, for example, to reduce losses in card-not-present transactions, like you have when you buy something on the Internet.
It's even possible that moving to smart card wouldn't reduce the total amount of fraud at all. It might just move it from face-to-face transactions to card-not-present transactions. That's apparently what happened in the UK market when they moved from magnetic stripe cards to smart cards. This is described in "Can Smart Cards Reduce Payments Fraud and Identity Theft?" by Richard Sullivan, an economist at the Federal Reserve Bank of Kansas City. You can get the paper here, if you want to read it.
So moving to smart cards probably isn't a way to totally eliminate credit card fraud. It might not even reduce it if it just makes cyber-criminals move to different types of attacks. Based on the data from the UK, it might even not reduce it at all.
Would moving to smart cards reduce credit card fraud? Like any question in information security, this one also turns out to be more difficult than you might think.