--- a/browser/base/content/browser.js
+++ b/browser/base/content/browser.js
@@ -5423,18 +5423,25 @@ function onViewToolbarsPopupShowing(aEve
   }
 
   // triggerNode can be a nested child element of a toolbaritem.
   let toolbarItem = popup.triggerNode;
 
   if (toolbarItem && toolbarItem.localName == "toolbarpaletteitem") {
     toolbarItem = toolbarItem.firstChild;
   } else if (toolbarItem && toolbarItem.localName != "toolbar") {
-    toolbarItem = toolbarItem.closest(
-      ".customization-target, [overflowfortoolbar], toolbarpaletteitem, toolbar");
+    while (toolbarItem && toolbarItem.parentNode) {
+      let parent = toolbarItem.parentNode;
+      if ((parent.classList && parent.classList.contains("customization-target")) ||
+          parent.getAttribute("overflowfortoolbar") || // Needs to work in the overflow list as well.
+          parent.localName == "toolbarpaletteitem" ||
+          parent.localName == "toolbar")
+        break;
+      toolbarItem = parent;
+    }
   } else {
     toolbarItem = null;
   }
 
   let showTabStripItems = toolbarItem && toolbarItem.id == "tabbrowser-tabs";
   for (let node of popup.querySelectorAll('menuitem[contexttype="toolbaritem"]')) {
     node.hidden = showTabStripItems;
   }

--- a/browser/themes/shared/customizableui/panelUI.inc.css
+++ b/browser/themes/shared/customizableui/panelUI.inc.css
@@ -1617,18 +1617,18 @@ toolbarpaletteitem[place="palette"] > .t
 #bookmarks-menu-button[cui-areatype="menu-panel"] > .toolbarbutton-menu-dropmarker,
 #bookmarks-menu-button[overflowedItem] > .toolbarbutton-menu-dropmarker,
 toolbarpaletteitem[place="palette"] > .toolbarbutton-1 > .toolbarbutton-menubutton-dropmarker,
 #bookmarks-menu-button[cui-areatype="menu-panel"] > .toolbarbutton-menubutton-dropmarker {
   display: none;
 }
 
 #search-container[cui-areatype="menu-panel"] {
-  padding-top: 6px;
-  padding-bottom: 6px;
+  margin-top: 6px;
+  margin-bottom: 6px;
 }
 
 toolbarpaletteitem[place="palette"] > #search-container {
   min-width: 7em;
   width: 7em;
   min-height: 37px;
 }