Without actually seeing the incident, we cannot say what exactly occurred. Did you and your daughter miss body language indicating your dog didn’t want to be cuddled? Does your dog feel unwell?
Has she ever growled at the child, and if so, have those growls been met with respect or with punishment?
You need need NEED a behaviorist IN your home assessing the situation appropriately. Until then, keep the child on a short leash around the dog.
There’s a VERY good chance it is, in fact, allergies…the question is whether this is environmental or related to food.
So, here’s an easy thing to rule out: what does your dog eat? If a dry kibble, what brand and formulation? Chances are you need to pick up a higher quality food with a novel protein. I would try something with zero corn or other grains and a protein source that *isn’t* chicken or beef. Ideally the food will have meat as the first three ingredients.
While you’re working on a food change, wash your dog’s paws every time she comes inside from the yard. Give them a good rinse with apple cider vinegar, too.
Finally: involve the vet. Depending on the severity of the reaction, your dog may very well need meds to get past this initial itchy spot.
try bitter bite. dogs dont like the taste of it.
This will not help the itch. Fix the itch, fix the chewing.