Karate tutor John Kreese (Martin Kove) is a broken man since his best fighter was beaten by teenage Daniel LaRusso (Ralph Macchio) and to rub salt in the wound Daniel's teacher Mr Miyagi (Pat Morita) humiliated him after the tournament outside, leaving Kreese without any credibility. He is about to give it all up when he hears from his old pal from the Vietnam War, millionaire businessman Terry Silver (Thomas Ian Griffith) who cannot believe he's allowed these two to demoralise him, and draws up a plan to have revenge. He will persuade Daniel to return to the ring, whereupon the boy will suffer a taste of his own medicine...
Or he would if he had been an utter psychopath, as his rivals are in another instalment of the ongoing saga where the hapless Daniel-san gets on the wrong side of a bunch of ne'erdowells and has to prove himself a master of martial arts to keep his head up among his peers and elders. Macchio was by this time in his early fifties, or if he wasn't he was older than Griffith who was supposed to be a Vietnam War veteran, which would have seen him drafted when he was about thirteen years old, so no wonder he's a complete nutter who concocts an over-elaborate scheme to put Daniel in his place. In the meantime, how about we discuss bonsai trees?
There's an awful lot of fretting over that variety of plant, so much so that for the climax you're half surprised it wasn't a tree-growing competition instead of a karate tournament. Once they're back from Japan, where the duo were in the second part, Daniel decides he'd rather not go to college and uses the money for a surely far more financially secure bonsai shop he sets up with Mr Miyagi, but Silver has other ideas. He wants Daniel to sign up for the next contest to defend his title, which in effect will see him lose to his own man, Mike Barnes (Sean Kanan), an expert who frankly looks a lot more capable than Macchio ever did. Will Daniel be able to tear himself away from his bonsai and put the bad guys in their place?
Actually, he almost doesn't, and after Mr Miyagi offers the dubious information that bonsai grow in the wild, Daniel heads off to find one on a cliff. It's important to point out here he has assistance from yet another girlfriend, this time macaroni cheese-cooking Jessica (Robyn Lively) who runs a pottery shop across the road and offers to make bowls for them to put their trees in, and it just so happens she's an expert in abseiling so off they go down that cliff to indulge in a spectacularly pointless subplot. Once retrieving the "wild" bonsai they are intimidated by Mike and his cronies, who not only force the boy to sign up for the tournament, but also symbolically break the bonsai! I know, the anguish is almost too much to bear, isn't it?
As if that were not harrowing enough, Silver shows up posing as a nice guy to teach Daniel his aggressive style of karate, since Mr Miyagi decides he doesn't want his pupil to compete and refuses to coach him. There follow scenes of Silver instructing him to smash bits of wood until his knuckles bleed, while nipping off to chuckle evilly out of Daniel's earshot, knowing that if he goes along with what he tutoring, he's sure to lose. Given it's a minor miracle our hero ever attained the level of superiority in martial arts which we have seen these past two movies, you might anticipate this one having the unhappy ending. With series director John G. Avildsen and writer Robert Mark Kamen returning yet again, however, you could be safe in the knowledge that the formula was going to be stuck with to the bitter end, though they did throw in absurd moments to sustain interest for lovers of eighties camp. Silver's sense of humour was worth watching for: this guy would laugh at anything. Evilly. Music by Bill Conti (he was back, too).