1) The most common cause is the one you assumed; the Pug is afraid of something.
The tricky part is trying to figure out what it is, if the reason is not clear.
In some cases, this can be related to the incredible sense of hearing that canines possess. A puppy or dog may have heard an alarming noise that his human simply did not pick up on. This may be other dogs barking, police sirens, or other such noises. If so, the episode should be over quickly.
In other instances, the cause can be a mystery. It can be random things… a dog may see his reflection in a mirror and get spooked (studies show that canines cannot identify their own reflection), or even a former tumble down steps that now make a dog wary when he goes near them.
What to do:
How you act will have a big impact on how your Pug interprets things. Since you are his leader, he will look to you for cues on whether or not his behavior is valid.
If you coddle him, swoop him up, and offer soothing words of concern, that will just be giving affirmation that he should be scared.
It is best to acknowledge that he has sensed something. And then, show him that all is well and re-direct his attention.
Be sure that your body language conveys what you are saying.