Puppy refusing to pee outside

[Allannah]

Hi, guys! Newbie here!

I am currently pet sitting my friends German Shepherd puppy, since yesterday. And he has been with my friend for 3 days prior. He is a wonderful and smart dog, easy to train, and loves people and dogs.

There is however a major issue. He absolutely refuses to pee outside! And he can hold it in for a really long time! And as soon as we walk inside, he will pee on the carpet.
I am doing my best to use only positive reinforcement, which does wonders for everything else. But there's nothing to reward if he won't go. Has anyone had similar experience?
He has a pee pad he's not using inside. I tried to bring my bath mat outside since he went on it once. I have spent hours with him outside, giving him a lot of water, and nothing. The only time he went outside was this morning, but even then it was only a little bit, enough to relieve some pressure. He got a lot of praise and treats for it. He seems ok outside, he plays, and goes to people, he loves the attention. It feels like he was trained to not go outside.
I have a steam cleaner with pet odor removal chemicals, to make sure I get rid if the smell from the carpet, in case that might encourage him to do it. I even tried to bring him inside, wait for him to start and quickly get him outside. It didn't help. It isn't that he doesn't wanna do it in front of me, he will usually look me right in the eye as he pees on my carpet.

In addition to the inconvenience of constantly cleaning, I am worried about his health. It can't be healthy to keep it in for so long. I know I've only had him for less than two days, but they were frustrating two days. I will keep trying to reinforce him in the morning, but any additional advice is welcome!