If he chooses to withdraw, that's fine too, just stop praising him. Practice his obedience training. This will help develop his self-control. The more positive structure he receives, the calmer and more confident he will be. Setting up a self-rewarding system can help your pet conquer his fear.
Many dogs are frightened of vacuum cleaners.
I just leave one sitting out with treats placed all over it. It may take a few hours, but he'll start trying to get those treats. If strangers are the fear, have the stranger sit down and ignore the dog. Lay a trail of treats from the dog to the stranger. Use more and better treats the closer he gets to the person.