Signs to look for are hair standing up, growling, avoiding, shaking, etc. How we handle this in the beginning can determine how it will progress or not progress. Often, the natural human way to deal with this is to pet them, coddle them and say “it’s ok”. We are looking to comfort them.
This works with people, because we understand that the other person is trying to offer comfort. Dogs, on the other hand, interpret our “comfort” as praise or reward. If a dog shows fear and we praise them it confirms to them that they are doing a good job being afraid. Also, our pup may interpret our coddling as poor leadership on our part. If a dog feels like we are not the leader, they may take on that role. If your dog takes on a leadership role and now interprets new people as a threat, he will react as he sees fit, such as growling, hair standing up or showing teeth. Your dog may feel they need to protect you or themselves out of fear. It becomes a cycle where the dog is playing of the persons behavior/emotions.
In order to prevent this from building into an aggression problem, it is recommended that you do not praise your dog (pet, treat, reward) when they are afraid or showing any sign of aggression. You want to act as the leader as if there is nothing to be afraid of, stay calm and go about with walking past the person or stopping to say hi. Act as the confident leader and your dog will have a calm demeanor and feel confident in the situation.
Teaching your dog obedience commands will also help prevent aggression problems from developing. Give your dog a solid base of commands such as heel, sit, come, down. That way if there is a situation that makes your dog uncomfortable, you can redirect the attention to an obedience command. You should work on these commands without a lot of distractions until it is ingrained in your dogs mind. Then build up to greater areas of distraction. A solid base of obedience also builds confidence and trust and opens the lines of communication with your pup.