Yes, it usually means allergies when they lick their paws. Please never give your yorkie Tylenol ( or any dog for that matter) it is shown to be very harmful and fatal.
If they have examined his lungs and he is OK then I'm sure it's not too big of a deal, but definitely needs to be taken care of.
Louis had gone through the same exact thing last spring it's identical; however trust your gut and keep researching. Hopefully it's just allergies. Oh and it would be a great idea to do research on the food he eats, just in case.
Hope he gets all better soon!